Typosquatting - buying domains based on a misspelling of a domain name (e.g., gogole.com) - is fraught with legal challenges.

But what about reverse-typosquatting?  Here, a company bases its tradename (and probably registers the mark) on a misspelling of a generic term.  Think of Flickr and Flicker (and of several other popular web 2.0 sites and their developer’s penchant for dropping vowels).

The presumably innocent owner of the generic domain can be flooded with typo traffic as non-savvy web users (those not in on the dropped vowel branding strategy) go directly to the generic site.  This might be a desired result if the generic owner monetizes his site with advertising, but what if they were hosting a site that was simply the “web home” of a business (say, a firebox manufacturer)?

And what if the generic owner decides to sell the domain to the web 2.0 company.  Is he a squatter?  In most scenarios, the generic registration likely pre-dates the web 2.0 domain (dropping vowels has only been popular for a couple years).

An academic exercise?  Nope.  Flicker.com is for sale and the owners have indicated that the site gets about 150,000 unique type-in visitors per month.

150k.  That’s a lot of traffic to unleash on an unsuspecting server.  With numbers like that, I think you’d switch to an advertising-based site right quick if it wasn’t your monetization strategy already.  It’s the “highest and best use” principle being played out in domain names.