Something similar happened earlier in the year with Nintendo 3DS flashcards, however the software was not just disabling the flashcard, but would brick the users 3DS.
Their response was essentially, "Yeah? What are you going to do about it?" and promising to replace the 3DS of anyone who could prove they were using a legitimate card.
Your post is accurate, but to those not already familiar with this incident (such as myself, until I searched for stories about it), a quick read will give the impression that this was Nintendo's doing, when it wasn't.
One big problem is that civil courts in the US do not work that way at all. FTDI could easily be found 5% responsible for an enormous judgement.
At the time they were the only functioning solution (They may still be? I'm out of the loop now) and everything else on the market were clones of their cards.
It was almost like a hostage situation with the community, a lot of people hating on the company, while hyping up their next update.