The only law broken by the counterfeiters is trademark violation for printing the FTDI logo on their chips. That's it! Everything else they did was legal. Otherwise, Intel and AMD would be bricking CPUs right now.
Reverse engineering is legal. Emulation is legal. Creating hardware that's compatible with another vendor's software is legal. Flashing your hardware with another vendors firmware is legal. Modifying hardware you purchased from a vendor is legal. Modifying software you purchased from a vendor is legal.
etc... etc...