Reusing branding always opens you up to liability. There are a lot of angles that you wouldn't expect, that trademark can be used to attack you with. And Nintendo are very hostile to any and all uses.
While Nintendo might not lose the trademark entirely if they don't sue, they could risk weakening its strength, therefore they have to sue in this case.
Consistent inaction against infringers can lead to the public perceiving the trademark as less distinctive. This can make it harder to protect the trademark in the future, and can encouraging further infringement.
