The Mighty Heroes weren't infringing on any copyrights in this short, although their enemy shares a name with villains associated with Batman and Captain America.
Yes, Terrytoons decided to pit the Heroes against "The Scarecrow", which, in this case, is a magically created creature, not a guy in a suit. Marvel's had 2 Scarecrows. One was a villain who fought Captain America, the other a supernatural being from the 70's. Of course, you all know about Dr. Jonathan Crane, aka DC's Scarecrow.
Typical fare. Suspension of disbelief required.