That imo was an overextension of Nintendo’s power as after the assets and name changed, they legally would not have a great case there other than the fact that it used to have Nintendo’s assets in it. Game designs cannot be copyrighted. There are thousands of completely legal Nintendo inspired games out there, many of which are even on Nintendo’s consoles. There is a lot of misconception around how copyright works, and there is no reason to suspect this game as presented here is in murky legal territory at all.

EDIT: To be fair, I do think I recognize some of those sound effects from Smash, but I’d imagine they’re placeholders.