How difficult would it be to sidestep the Palworld lawsuit, anyway?
(boundingintocomics.com)
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Does prior art not exist anymore?
That's what the patent just got rejected over, there's plenty of prior art to point to that makes these patents worthless. However, Nintendo has infinite money, time, and lawyers to file horseshit patents and sue people with. They can keep filing losing lawsuits forever and impose significant legal cost to making products that compete with Nintendo. Even if they lose every single one, they can still force small companies to spend way too much money on lawyers and potentially drive them bankrupt. That is why Nintendo has to be punished for doing this, beyond the simple cost of the lawsuit.
With the continued popularity of the Switch as the normie console du jour. That isn't likely to happen.