They aren’t working within any rights. Emulator production is a legal right that Nintendo has neither the ability to bestow nor deny. It’s the founding legal rationale behind virtualization as a technology. This is the equivalent of someone holding a gun to your head and telling you to shut up - the forced relinquishing of your rights through threat of force, and it’s a little frightening to watch people suggest otherwise. This has played out in court and is settled law. Bleem! went BANKRUPT to secure a legal victory against SONY and establish that emulators are completely legal and there is no “gray area” about them, and you should be in less of a hurry to throw legal rights away because “Well, Nintendo said so…”
You’re incorrect. Creating an emulator is not illegal. Nintendo has the legal right to threaten to sue someone, but if you are threatening to sue for something that is not a crime, and you know that, and you do it anyway in the hopes of bankrupting them before the case settles, that’s not a legal proceeding, it’s extortion. I can threaten to sue you for cooking pancakes in your house, and while it’s technically ALLOWED for me to do that, it’s clearly and obviously not a case I would win, but if the threat of making your life hell is prominent enough, you might get forced into backing down, which is exactly what’s happening here.
They would absolutely NOT lose in court for creating an emulator. I cannot stress enough exactly how legal emulation is. It’s as legal as making your pancakes. The only way they would lose in court is if there is some EXTRA thing they’ve done that we don’t know about. If all they’ve done is create and distribute Ryujinx, there is absolutely NO way Nintendo would win a case in the US. This is settled law, and saying it isn’t doesn’t make it so, although it DOES embolden companies to bullshit developers with more bogus threats in the future.