> I can not believe this is the normal legal process.

It's not.

> There must have been some extraordinary circumstances that I am not aware of.

Possible, but so far, the case is mostly sealed (refer to the above statement). From what we know, Microsoft identified some botnet(s) using noip's service as part of their infrastructure. Nothing points to noip knowing about the botnet, so we must assume until we know otherwise that they had no knowledge. This leaves us with a US company waking up one day to find their property seized by another US company, supposedly with the backing of a US court.

> Given that Microsoft probably hasn't got more legal rights than anyone else, could No-IP do the same to Microsoft?

Probably not -- Microsoft has a history of helping Law Enforcement track down botnets -- in the past they have literally marched into data centers and seized all the servers from a company without their knowledge (they even did this overseas outside of the US once). It's unlikely if noip were to bring suit against Microsoft, that it would go anywhere.

(It's as scary as it sounds when a private company is leading Law Enforcement, instead of the other way around).

Considering how little the public knows about this case, I wouldn't be surprised to find out that no-IP refused to respond to the court process, so the court simply ruled against them. Just as with lavabit, a petulant refusal to respond to legal process does not result in good outcomes. Instead it results in the forfeiture of your rights within the process.

Not really. We've got the text of the actual restraining order under which the domains were seized, and it's quite clear on the fact that No-IP wouldn't get advance notice of the fact that Microsoft were trying to seize their domains or a chance to challenge it:

"Microsoft’s request for this emergency ex parte relief is not the result of any lack of diligence on Microsoft’s part, but instead based upon the nature of Defendants’ unlawful conduct. Therefore, in accordance with Federal Rule of Civil Procedure 65(b) and Civil Local Rule 7-5, good cause and the interest of justice require that this Order be Granted without prior notice to Defendants, and accordingly, Microsoft is relieved of the duty to provide Defendants with prior notice of Microsoft’s motion." (Microsoft's motion in question being their attempt to seize the domains.)

The basis for this was "unlawful and/or negligent conduct". Basically, Microsoft managed to convince the courts that because in their eyes No-IP weren't policing their services well enough, Microsoft had the right to seize all their domains and shut them down without giving them the opportunity to challenge this in court first.

I seem to remember the massive DDoS Microsoft enacted against the blackhole servers of the RFC1918 in-addr.arpa zones for example, that was borderline criminal. I could probably think of a dozen other occasions, including the contant stream of spam that was Hotmail for quite some time after the takeover. Could I have had windowsupdate.com or hotmail.com seized then? I strongly doubt it.

Possibly -- and I guess time will tell.

However, given the tone of noip's public statement regarding this issue -- there seems to be no indication they had any forewarning, be it refused court order or not.

Since we know very little at the moment -- it has to remain a possibility that the other happened -- we are left in the dark on purpose due to the nature of the event... and possibly some favorism from the court (citing Microsoft's past aid to law enforcement)