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However that has nothing to do with a game that's made without any of their software. In the case of Palworld the question is wether Palworld breaks copywrite rules which I believe it does not. It's certainly close to the line, but not over it.
Just another case of why you should never settle.
At the end of the day you only lose if you give into the corporate threats and legal coercion.
Or would it be apples and lemons?
It's a little different in the case of Yuzu and Citra. Those are emulators and that's simply illegal. So in that case settling is the better option, since they'd almost certainly lose in court. They could try to argue they have no control over what users do with their program, but the intended use is pretty clear I'm afraid.
Since they have been in that legal gray area where they don't technically provide any full package, you still need to get the core files yourself.
Emulators are a tool and Yuzu had instructions on how to use it legally by dumping your own switch and rom.
The fact that Ruyjinx hasn`t been hit makes me think that the main reason for Yuzu hit was patreon.
1) yuzu garners a large amount of patreon users
2) yuzu has paid versions of their emulator which are bleeding edge versions, which often allow users to play newly released titles on day 1 or even before release.
They always were since they operate in a grey area. Though it depends heavily on the type of emulator. Nintendo seems to be way more strict than any other company.
That's the grey area you are talking about. That can work as long as the creator does not provide access to actual games, although there is the matter of the intended use which is hard to defend in court. (That's how they got Bowser in court for example, though that involved a hacking program.) In this case it was even easier for Nintendo since the creator of Yuzu provided access to actual games through his patreon.
As i told in other two posts:
Game mechanics are generally not protected by copyright, as they are elements considered ideas and functions, that are not subject to legal protections.
Designs and apperances, those are covered by copyright, Specific changes can make it so that it's not considered stolen assets.
TLTR;
Nintendo is known for swift harsh actions againts property intelligenge issues and if they did not hit palworld yet means they have little or no ground at all to do so.