It's applying an old business model to a newer technology or idea. This works for something like a television network, not sure about a YouTube channel. The idea is sound, but the execution and how they presented it hurt them. I understand they want to protect their videos and content, but their format has been done by others before and now claiming it as theirs is the reason this is beyond shady and full of greed. React World appeared to be their attempt to globalize their channel's format, but it's globalizing a format that really wasn't theirs to begin with.
Had they managed to get away with this they would have flooded Youtube with React videos and they wouldn't have had to pay a cent for it. This subsequently would have made it far more difficult for an alternate reaction style channel to make a name for themselves. Not only that, had one of these affiliate React channels started a new show like 'Teachers React' or 'Doctors React' or '(insert title) React' etc, the Fine Bros would have trademarked those names too. That could have given them trademarks for literally hundreds of titles. They essentially would have been a monopoly within the genre had they not been caught out.