As far as I understand it, the way it works is that section 1201 of the DMCA has two parts. One part prohibits breaking DRM, and one part prohibits trafficking in devices or software intended to circumvent DRM. The part that prohibits breaking DRM has tons of exceptions so previously legal behavior doesn't become illegal just because something has a digital lock. However, the part that prohibits trafficking in circumvention devices has none of these exceptions. That's the part that Nintendo uses to go after emulators.
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