No matter how this ends up, it cannot be good for Nintendo.
Think about the media for a second. No matter the reason they will "spin" this mess as huge corp vs. an independent small firm. The uniformed population will believe this mess without question. Hell, with all the problems big corps have been getting into lately, it would not surprise me if the majority took this as Nintendo (The big corp) trying to squish the little guy (the producers), regardless of how the media spins it.
It to bad too. Nintendo is 100% in the right here, but I cannot see them getting out of this in any better shape than they went in.