Atmel Studio 7 prompted me to upgrade a JTAGICE3 tool recently. I went ahead with the upgrade since I couldn’t use the tool without it, and I have done it with the JTAGICE mkII on several occasions. After the upgrade was successfully completed, I found the JTAGICE3 in a state that is generally referred as bricked.
I left it aside for a couple of weeks until I decided to visit AVRFREAKS, and found a solution.
You’ll need to put JTAGICE3 in bootloader mode. Short the pads highlighted in the image below, and plug it in.
Then, from Windows command line run
C:\Program Files (x86)\Atmel\Studio\7.0\atbackend>atfw -t jtagice3 -a "C:\Program Files (x86)\Atmel\Studio\7.0\tools\JTAGICE3\jtagice3_fw.zip"