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Important Edit: By the way, the original Blog that reported on this lawsuit has many errors in it.  "Nyan Cat" was a valid copyright as of April 2011, and Scribblenauts unlimited wasn't released until late last year (2012).   
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When I first heard of Nyan Cat being used commercially in Scribblenauts Unlimited it was in the debut trailer for the game:
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http://youtu.be/9lkqdQsLcQE
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http://i.imgur.com/hcWYl.png
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http://scribblenauts.wikia.com/wiki/Nyan_Cat
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Previous Scribblenaut games have featured Keyboard Cat too.  Even 5th Cell Producer admits using our creations:
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http://www.vgblogger.com/vgb-feature-scribblenauts-unlimited-qa-with-5th-cell-producer-brittany-aubert/18683/
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We reached out to the companies in hopes of working out an amicable resolution of the issue, yet were disrespected and snubbed each time as nothing more than nuisances for asking for fair compensation for our intellectual property.  That's not right.  I have no issues with Nyan Cat being enjoyed by millions of fans as a meme, and I have never tried to prevent people from making creative uses of it that contribute artistically and are not for profit.  But this is a commercial use, and these companies themselves are protectors of their own intellectual property.  Many other companies have licensed Nyan Cat properly to use commercially.  In Scribblenaut Unlimited, you have to actually type out the words "Nyan Cat" and "Keyboard Cat" to get our characters to appear in the game. In fact, the game forbids you from making any copyright references in their games with a pop-up error.  Meanwhile, 5th Cell recently negotiated proper rights for several Nintendo characters for their games.  Just because popularity with millions of fans has caused Nyan Cat and Keyboard Cat to become famous by virtue of their viral or meme nature, doesn't give these companies a right to take our work for free in order to make profits for themselves, especially considering too that they would be the first to file lawsuits against people who misappropriate their copyrights and trademarks. It just isnt fair.  I've been working alongside with the creator of the music and the lady who uploaded it to YouTube since the start.  There are many reputable companies that have respected our rights and negotiated fees to use our characters commercially.  Warner Bros. and 5th Cell should have done the same.
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Since Warner Bros. and 5th Cell chose to act as if we had no rights in characters we created, filing a lawsuit was the only way we had to protect our intellectual property rights from being used for others' commercial profit without our consent.  Too often normal artists like us don't have the means and resources to protect our rights against big media corporations who use our work for their own profit without permission.  We are looking here just to be treated fairly and to be fairly compensated for our creative work.