>>58200118
GF can C&D Showdown if they want, but the SCOTUS has ruled that simulators are fair use. As long as Smogon didn't use Game Freak's assets they would be legally fine. All they'd have to do is rename everything and change up the sprites and then offer a mod on the side that reverts the changes and they'd be legally in the clear.
There's nothing Game Freak can do to stop Showdown other than offering a service so good that nobody would bother using Showdown.