>>56478031I think it was two factors:
1. It was successful enough to catch Nintendo's attention, unlike most D-list Pokemon rip-off indie games
2. The designs were similar enough to Pokemon that it caused Nintendo to ask their legal team to comb over the game and make sure none of their assets were being used
Gamefreak likely doesn't really care that much about "embarrassment" or whatever, since the bulk of Pokemon's money comes from merchandise. The games are largely a vehicle to promote the next wave of characters to put on toys and such.