Ok so I got two points to say here (TL;DR crytek will need to work hard to make it stick, if at all possible)
1) About "Bug fixes", from a software engineer's (that's me) point of view, I would say a bug is defined as this: was A supposed to happen but didn't? that's a bug. Now, since CryEngine wasn't able to fulfill some of the requirements CIG needed, and they had to add it themselves, that's not a bug fix, that's extra that belong to whoever made it. So I don't see how CryTek will get away with this claim.
2) Breaking confidentiality of the code, well, I think in this point they were talking about Bugsmashers here. They do show code there, which could be trouble IF the code is indeed part of the CryEngine and not Lumberyard or code that CIG wrote from scratch. But I honestly doubt CIG would make such a silly mistake of showing other people someone else's code, that is not open source (i.e. the owner shares the code openly with the masses), I do believe they have legal guys that Bugsmashers will be consulting with about what they can or can't show.
And about the other points they had, horse:poop:.
P.S. About the point montoya made, that CryEngine is free right now so there is no harm that they shared source code with third party, think of it like this: I made an amazing recipe for lemonade, I gave you that recipe so you can sell lemonade (and anyone that asks), still not ok to pass that recipe to someone else without an ok from the owner... or at least that's what I think :banana: