I think you're mixing copyright, patents and trademarks. They are actually quite different in scope, subject matter and duration so please try to keep them apart. From your description, I'd guess that your story concerned a trademark. The USPTO can very well deny a trademark application for a name that can be mistaken for a name already registered in a different, but similar, category. Or grant it, as you say it's a bit of a crapshoot.
One real-world example: Apple Records could not keep Apple Computer from trademarking their name until Apple Computer went into the music business with iTunes. It's still not the same category (record company/recording vs music distribution/sales) but close enough to possibly cause confusion and a court date.