Excluding laws in certain places meant to protect children from a life of ridicule, you can name your child whatever you want.

The issue of trademark, which is what this article highlights, only concerns applications where there is a business conflict. For example, it is normal for an actor/musician/artist to trademark their name as their "brand," which means I can't just form a thrash metal band called "Taylor Swift" to profit off of some confused music listeners. And even if my legal name was Taylor Swift, I could still be required to change my "stage name" to something else when promoting myself as an artist to avoid any confusion/conflict with Tay-Tay.

Last I checked, Warner Bros is not in the passport industry, so this is a dumb argument that should never have occurred. If I had to guess, it was probably just some random disgruntled government employee who felt the need to play armchair activist and "punish" a parent because they didn't like the name they chose for their child.