That may not be punishment enough to prevent them from becoming a repeat offender. In an ideal world the result would cost the directors the right to start a business for a long period of time.

I don't see that as too severe in any light - This is pretty close to fraud: trying to undercut market forces by dishonestly claiming rights to the name of a business with 7 years more history.

Their only defence to malicious intent would be ignorance of the author's business existence prior to theirs - which is completely unbelievable considering that's the first and most obvious fact that will be used to settle the issue. Their lawyers would have to claim complete incompetence.