Domain name ownership rights

In my last post, I talked about the problem facing my company regarding our domain name, basically, some IT guy who worked with our company as IT consultant decided to register our company domain under his name, and now he is black mailing us, asking us to pay him money in order for him to release the domain to us.

This case got me thinking about the latest development in this field, what the law says about domain names? Are they protected by any copy rights? If the company business name is officially registered with the local chamber of commerce or the local court, would that automatically give them the rights over companyname.com domain name?

We all heard in the early ages of the internet about how big corporations would pay millions for domain names; Is there any development on the legal side of this issue?