Attacks from real IP addresses are potentially blockable upstream. That's only a temporary fix. The device, if behind a NAT, can request a new IP address and evade the block. It may do so periodically, just to confuse the issue. At least you can block a hostile IP at a firewall, so it can't use server resources. That's what Cloudflare is doing.
On the legal front, it's worth suing makers of vulnerable devices for negligence. Their EULA will not protect them, because the victim isn't their customer and isn't a party to the EULA. A few court orders to recall a product might get the attention of the IoT industry.
[1] https://www.damballa.com/downloads/r_pubs/WP_Botnet_Communic...