The buying and selling of domain names is often compared to the buying and selling of real estate. While this is a good comparison to understanding the industry, there are many differences in the legal environment. Due to the linguistic nature of domain names, it is important to consider trademark law in relation to domain trading. It is completely legal to trade domains as long as the domain being sold does not infringe on the trademark rights of a third party. Domain name sellers should be aware that it is their responsibility to ensure that their domain name is free from possible trademark infringements before listing it for sale. Ignorance of the law is no excuse!
Trademark holders should be aware that possessing a trademark for a given term does not automatically mean that you have a legitimate legal claim to a domain name. Possession of a valid trademark is only one of three requirements that you need to meet to win ownership of a domain name via ICANN's Uniform Dispute Resolution Policy (UDRP), the policy governing ownership disputes for the generic TLDs (.com, .net, .org, .biz, and .info) or the U.S. Anticybersquatting Consumer Protection Act (15 U.S.C. sec. 1125).
Just as important are the requirements that (1) the domain registrant have no legitimate interests in the domain and that (2) they evidenced bad faith in registering the domain. Both elements require evidence beyond the mere registration of a domain. Please take the time to inform yourself about the UDRP and other legalities governing domain names using the resources provided below.
Before you make a complaint, make sure that you have consulted a qualified trademark attorney with experience in domain names. Legal disputes should generally be considered a last option: the cost for a UDRP case is $1,500 plus legal expenses, and there is no guarantee that you will win (for a complete schedule of UDRP fees, click here).
If you sue and lose, your chances of then being able to purchase the domain from the current owner is greatly reduced. In addition, frivolous UDRP claims against domain owners can result in a finding of reverse domain hijacking - a practice in which trademark holders engage in a bad-faith attempt to use the UDRP to wrongfully strip the legitimate registrant and user of a desired domain name simply because the complainant holds a trademark in that name or one similar to it.