Wow... I didn't knew that. This sucks.
In any case, i believe this was sparked by the fact that Cockatrice was getting too popular, more popular than Magic Online, even, possibly. There are alternatives, like Octagon and Magic Workstation, though.
I think part of the reason why they managed to target Cockatrice and not Magic Workstation, for instance, is because of built in mechanics of the M:TG game, and stated goals. Magic Workstation is not sold/distributed as a platform to play Magic: The Gathering online, but rather as a platform for the development and playing of card games, in general, and there are no built in M:TG mechanics inside of Magic Workstation. Rather, the scans, card text & rules, are provided elsewhere, and the program just provides a framework that accepts that format and enables you to play.
I do hope the creator of Cockatrice gets competent legal advice, and that the project is able to be revived, impervious to WoTC's legal claims.