I think the fundamental issue here is that the court actually granted Microsoft's rediculus request. The only valid ruling here was for the court to order the suspension of the domain.

Seeing that Microsoft are an unrelated third-party, what was the judge's reasoning for granting them specifically ownership of the defendant's property? Wouldn't it have made more sense to assign ownership to a government organization instead?

Did Microsoft reimburse the domain owner the value of the domain or did they just steal it without payment?