It is possible for something to be well within their legal rights while also being what is colloquially known as "a dick move". It costs Nintendo absolutely, positively nothing and nada to allow random Garry's Mods to use models ripped from their games. This action is beneficial to nobody, anywhere.
Trademarks must be actively defended to be maintained. Nintendo has to either do this or hand out free license to all of the creators. Even doing that could be used against them in the future, I suspect.
Doing nothing would literally cost them their company, because without exclusive rights to Super Mario, Zelda and so forth, they're just a manufacturer of subpar hardware.
Sega has long had an intentionally loose policy with regards to fanart and fan games and rarely issues takedowns for projects that don't generate profit. It doesn't seem to have hurt them at all.
Capcom too. An infinite amount of Mega Man fan games. Quite a few Mega Man bands making music, performing live. Projects that have been active for literal decades now. Do they issue silly takedowns and destroy all this culture? No, they invite them to play at their official events.
It's just corporations like Nintendo that suck. It's definitely not alone in that group. We all need to stop giving them money.
I feel ya, but I am sympathetic to the argument that Nintendo’s IP is uniquely valuable and their brand is globally very unique. They prize their reputation and the Nintendo authenticity seal has been a thing since forever.
This takedown is not based on trademark, but copyright (you can tell because the article mentions the Digital Millennium Copyright Act).
It's true that you have to defend a trademark, but that doesn't actually mean you're required to go after anybody using your trademarks without authorization.
Let's chat again in 10 or 15 years and see whether every other piece of popular media ever has lost trademark rights due to not being DMCA'd out of Garry's Mod. I'm on the no side of that bet.
