Protect your Web Site from Cybersquatters: "5. 'The Ransom Artist': Someone reserves a variation of your company name before you can and then attempts to sell it back to you for an outrageous amount. Fear of being victimized by the above scenarios causes many companies to spend thousands to recover names that were overlooked when they initially registered their domain name.
Can this really happen? Is this legal?
Yes, it can and does happen everyday. Is it legal? Depending on the situation, site owners may have legal recourse (e.g. trademark infringement lawsuits or arbitration"
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