Technology
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It possibly seeing a legal precedent is the scary part.
Settling out of court is not setting a legal precedent
And that's probably why Yuzu didn't stand up to Nintendo. They probably had enough areas for Nintendo to attack that fighting it could leave the emulator community worse off if it goes to trial. Why risk the money to fight something unless you're sure you can win?
Maybe. My guess is they just didn't want to go through the trouble, since it would have been a long war.