I think the games are so clearly different in mechanics, audience and design that, all they have is character likeness infringement. But there are literally hundreds of pokemon, and I have a hard time suggesting Pokemon should be the sole rights holder for "Pokemon like character design".
Given how broad the Pokemon character IP is, I am surprised Nintendo has not been sued themselves. But so different is IP law in Japan that Pokemon itself was altered at inception to avoid being in conflict with an entirely unrelated IP, Ultraman. The game was originally capsule monsters, but Ultraman has capsules, so they changed it, even though the stories and world's mechanics are otherwise entirely different.
It certainly raises questions about the not-Pokemon-wink-wink Digimon franchise. Or the recent Cassette Beasts[0] which has a lot more mechanical similarities to a Pokemon game than Palworld.
it would be incredibly dull if only one company was allowed to make "catch things and make them fight for you" games. Or a game whereupon the player character is rendered from the point of view of the character's eyes, there are multiple other characters (player or non-player) and shooting was the point.
valve being so successful with half-life, when it was just a "less alien" version of unreal, or a less "doom" version of "Quake". Yes it was a great game but the mechanics of gameplay existed for ages; prince of persia had the 3d platforming, the ones previously mentioned for FPS, i don't think the gravity gun was unique itself, but perhaps in a first person shooter, it was. Heck borderlands and rage take half life style gameplay to new places. Minecraft wasn't original (also Lego, in there too).
innovation requires "remixing". Wholesale copying of assets and code should be punished. "prior art" needs to be scrutinized, because "did they actually make this, is it actually novel" is an important question.
Given how broad the Pokemon character IP is, I am surprised Nintendo has not been sued themselves. But so different is IP law in Japan that Pokemon itself was altered at inception to avoid being in conflict with an entirely unrelated IP, Ultraman. The game was originally capsule monsters, but Ultraman has capsules, so they changed it, even though the stories and world's mechanics are otherwise entirely different.