As it's a law suit you can never say. Unless it's changed dramatically over the past couple of weeks it's just a blip IMHO. Cryteks claims don't add up. The contract they have was for exclusivity but Crytek appear to have assumed that means Star Citizen (or then Space Citizen) MUST be made with Cryengine. I don't read it as that when you look at the contract though, all it does it grant rights for CIG to use Cryengine, it doesn't say they MUST use it.
Yeah to be fair though after what CIG have said in that RSI cannot be involved in the contract dispute has left them open I feel. See my thoughts below on each part that CryTek are shooting at CIG.
The use of their licence and which company
CryTek are suggesting that either they are part of the same company and so can be named accordingly and thus follow up their original claims direct against them or they are not part of the same company and thus should not have been using CryEngine at all as it was only licenced to CIG and so CIG have then given a third party access to CryEngine without having the rights to do so.
If the second stands true than they have much bigger issues tbh. Anything that RSI has produced has been done illegally with software they should not of had access too. With that it means all of SQ42 and any assets that SC uses that were created by RSI would need to be redone from scratch (fortunately a lot is anyways), however it also means they don't legally own the code or anything similar from RSI either. That needs to be destroyed or a sum paid accordingly to CryTek. Now the court is not likely to rule tens of millions as the cost of the licence seems to sit around $1.8 million so with that I think they will get something around the $5 million mark in this case.
And this is for the use between 2013 (when RSI was formed and March 2016 (in which you had to pay a fee to use it).
With that though I thought RSI was a subsidiary and I cannot see anything stating that CryTek allows for use of CryEngine with subsidiary but it also does not explicitly forbid but rather third parties and so the term "third-party" may be taken into account with or without the idea that a subsidiary is and that will be the argument I believe CIG will be making in terms of use of CryEngine in that it had the right to allow it's subsidiary to utilise the licence accordingly. If this is passed it would dismiss the CryTek claims in that the contract is still CIG to CryTek but RSI still have the right to use.
Exclusive or Note
They cannot be suggesting that CIG cannot use Lumberyard to make a game if they are saying they can only make Star Citizen with CryEngine and thus one or the other has to exempt. However they could still state that if it really was only one game for example SC that coudl be made with CryEngine then SQ42 shouldn't of been developed at all.
However it is more likely to be that both are 'The Game' and thus both under the exclusive side of things. However the definition of exclusive seems to be very abstract from CryTek. That one I think would be dismissed once the judge looks at it.
Sharing code to public domain
The point of bugsmashers I think CIG have messed up and any code that is CryEngine (not written by CIG/RSI) that was shown would cause issue and so they will have to highlight specifically what is CryEngine code to court to say that is ours etc. If they cannot prove that code is theirs then it will be dismissed so that really depends on someone going frame by frame through all the Bugsmashers series that falls within the date it showed to when they moved to Lumberyard in house.
With that, the fact that anyone had access to source code as well actually would mean that although in contract it states not to share if it becomes open source then that should no longer be aplicable as CryTek have basically waived their agreement in that section as they have already made it open source. Again this will come down to time and judge seeing the relevant data.
Conflict of Interest
The conflict of interest seems of note though, as it does appear that the letter did not cover what CIG claimed and once we see that letter that will quickly determine that. What ramification that has on any of the above, that is really unknown.
just worth a clarify otherwise next will be "well I haven't had an update" etc. 
