>>55724438They can't. Worst they can do is tell Smogon to stop using the Pokemon brand. All that means is Pokemon Showdown won't use Pokemon sprites or music anymore. Basically, every day on Showdown would be like April Fool's Day where all the sprites are facsimiles of the Pokemon. Smogon could then offer an external mod that changes everything back to how it was before so long as the main client doesn't show any official Pokemon.
Emulators and simulators are ruled to be legal. Pokemon Showdown can be a battle simulator and Game Freak can pound sand.