I am not a lawyer and not in the sue happy US but personally I would say not much of a chance.
I own at least 5 little garage band name domains from around the world that I know of and i'm sure I have a few names that people have as forum identites or pseduonyms or tags for their subdomain websites that might even get a few hundred visitors a day. Would I ever give it to them for nothing? no way. Something like papershaker is actually a term used to describe cheerleaders and since I don't see Microsoft owning Word.com good luck in that respect. The guy could put up an adult site if he wanted to, works well for branding, and really not much you could do about it unless he is the one going to you and saying "I will do this to it unless you pay me $XXX"
What will your friends do when they see another band use the same name? what if the other band has had that name for longer? Do your friends have a Trademark on the name? are they an international act? The guy just has a netfirms parking page, if your friends approached him to get the name then it's not like he was actively trying to sell it back to them. He might have liked the catchiness of it. A few registration systems work in a similar fashion.
In the domain game you snooze you lose. Obviously the band didn't think it important enough to take care of so it's an important lesson to learn. You think the .com owners of a ccTLD name care to give it away for free when the ccTLD people ask for it because they were too slow to grab the .com version? Unless it's a TM or bad faith you got very little to work with.