Thanks to Super Mario's 35th anniversary, Nintendo's red-capped plumber mascot and his friends have been in the spotlight. Super Mario 64, Super Mario Sunshine, and Super Mario Galaxy just re-released through the Super Mario 3D All-Stars Collection, which may herald more Switch ports down the line. As a result, it makes sense that Nintendo recently filed a takedown against an erotic fan game that puts Princess Peach in some compromising situations.
Peach's Untold Tale is a project that South American developer Ivan Aedler has been working on since 2012, according to his Patreon. It features Peach (or substitute characters like Rosalina) going on an adventure where they are able to fornicate with various denizens of the Mushroom Kingdom, as well as perform other acts that are a far cry from anything one might expect with Nintendo characters. The company's takedown notice has been posted in a GitHub, which says Nintendo doesn't believe the game "qualifies as a fair use of Nintendo's copyright-protected work."
Aedler's game has been updated continually over the last eight years on a fan forum dedicated primarily to Flash-based erotic projects, as well as on Patreon where they describe themselves as "creating parody art, games and creature scenes." An update posted to the forum in March assured fans that they were safe and continuing development during the initial spread of the coronavirus pandemic.
Nintendo's takedown was filed through the Digital Millennium Copyright Act of 1998 (DCMA), which outlines limitations on liability through Title II in specific cases, such as use by nonprofit educational institutions and fair use barring any monetary damages to the copyright holder. The Act states that copyright owners must demonstrate the "provider" has infringed upon its properties, and Nintendo has not been shy about filing takedowns on fan games like No Mario's Sky in the past.
In fact, Nintendo is notorious for keeping an iron grip on its intellectual property, unlike developers such as Sega who tend to encourage Sonic the Hedgehog projects. For example, in 2016 Nintendo filed legal action against the fan-made Pokemon Uranium, as well as a Super Metroid-style remake of Metroid 2 called AM2R.
Once something is posted to the Internet it is hard to completely remove, but it's fairly obvious why Nintendo would want to get rid of a Super Mario project that bumps up against its family-friendly nature. In the past, some of Nintendo's DCMA takedowns have pre-empted its own releases, such as AM2R getting hit before Metroid: Samus Returns was announced; or when a Mario battle royale game was hit last year before it was revealed that Nintendo's Super Mario Bros. 35 was releasing for the 35th anniversary.
Sources: Polygon, GitHub, U.S. Copyright Office