At the time you buy the domain, I don't think any laws are being broken..

However, what you do with the domain after you buy could make it an illegal purchase.

Suppose you buy the domain and then:-.

1) offer it for resale.

2) park it.

3} redirect traffic to another domain.

4) develop it within the same niche as the Trademark.

All of these things would constitute a breach of the IP laws in my opinion.

This is not legal advice, just my interpretation of the cybersquatting laws...

This is as Exsedo says an awkard one...

If I had registered Warcraft.com for the sole purpose of online gaming and then a company such as Blizzard had made a game based on that name a couple of years later then they would have to go f**k themselves for the name, however they could make a case to ICANN that is is better in their ownership than yours...

You would be breaking no trademark laws since you owned the name before they registered it...but big business and bribes don't always fall on the side of the right and just.

I read this in an old book therefore it is not legal advice, hire a real lawyer...

Here's my "I am not a lawyer" $0.02:.

The ORIGINAL registrant is probably OK to keep the name (depending on if and how they've been using it). However I believe that selling it would be construed as profiting from the mark. The fact that the seller registered it before the tm was registered wouldn't give YOU (the buyer) any protection, since your transaction would be taking place after the tm was established...

It is one possibility that the TM holder actually has more rights to this domain than the domain registrant.

I definitely wouldn't touch the domain if it's a non-generic single use domain...

It is impossible to provide a generic answer to this question. It depends a lot on the actual domain and the TM registration. For example, a five letter long domain could be a meaningful abbreviation of a company or product name. I believe actual use of a domain also is an essential factor. If this is an important domain and you plan to invest a large amount of money you should seek professional legal advice.

Otherwise if you only spend a small amount on the domain it might not be worth it to get legal advice and you should just be prepared to hand it over if the TM holder contacts you...

THANKS everybody for the valuable words and time. Helped me analyse the name and make the decision. I guess it's worth to be on the safer side.

Will add Rep to everybody, very soon...