No - that's NOT what they decided. This is BAD. (Score 1)

You've misunderstood the court's ruling. From the article:

The ruling stems from a trademark infringement suit filed against a Canadian corporation, 3263851 Canada, Inc., by Umbro International, a manufacturer of soccer equipment. In the suit, Umbro claimed the defendant infringed upon its trademark when it registered umbro.com in 1997. When the defendant failed to show up in court, the judge issued a default judgment, turning over umbro.com to the company and awarding it $25,000 in attorney's fees.

The court held that despite the fact that 3263851 Canada Inc. had paid for the domain, the name Umbro was trademarked, and therefore the domian name umbro.com was an extension of that trademark.

The problems with this ruling are daunting. As I understand it (insert disclaimer), the same name can be trademarked concurrently, as long as the name refers to different contexts. i.e. there can be simultaneous Umbro trademarks owned by Umbro the sports equipment manufacturer, and Umbro the (hypothetical) dance company. Think about Windows(R) for a moment to see why this must be so.

So what happens where there are two or more legitimate trademarks of the same name (e.g. Windows) and there is only one whatevername.com? Obvously the idea that a domain name is a natural extension of a trademark cannot possibly be logically consistent.

I'd need to read the actual decision to see what the judge's reasoning is though. Further, all this is subject to an appeal.