Remember those devices you see at the mall with a ton of games in a controller you hook up to your TV? Apparently they have arrested 4 people who have been selling the NES clones recently in New York.
Emulators generally aren't illegal. It's the copying of the game that's illegal, not the process of running it.
Anyway, as for still selling NES clones, it's probably just down to the fact that the design already exists and still sells well; moving to something like SNES or Genesis would just make it more expensive to produce because the games are much larger.
And the fact that Nintendo has a copyright/patent on "NES" and the hardware, and the design, etc.
Truthfully, what company wouldn't want to jump at an easy money-making opportunity, like fining counterfeiters for example?
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