I believe the complaint was that the covers (allegedly) crossed the line from parody to rip off.
If you look at the picture DWB posted above, the costume is virtually identical, unlike previous versions of the Roach, where the antennae were prominent.
The covers did not say, for example, "introducing Wolveroach," or anything else to indicate it was a different/parody character. There were no captions and only the title of the book. The character wasn't doing anything "funny," but rather, engaging in actions that would look completely normal on a "Wolverine" or "X-men" cover.
You basically had wordless covers with a character that was identical to Wolverine doing very Wolverinish things.
Now, perhaps, if it had gone to trial Sim would have won but that would have been prohibitively expensive for what was a throwaway character. Also, apparently, at some point, Sim and Shooter had a discussion about it at a convention and Shooter convinced Sim that it was those particular covers having crossed the line and Sim saw his point.
