It is an illegal practice under many trademark laws is the correct statement.

Domain name squatting, often called cybersquatting, is the registration or use of domain names that are identical or confusingly similar to established trademarks with the intent to profit from the trademark holder. Many jurisdictions treat that conduct as unlawful under trademark statutes and provide remedies such as transfer, cancellation, and monetary damages. For example the United States has the Anticybersquatting Consumer Protection Act which permits trademark owners to sue for bad faith registration and seek damages and there is an administrative procedure under ICANN called the Uniform Domain-Name Dispute-Resolution Policy that allows for arbitration and transfer or cancellation of abusive registrations.

It is commonly condemned yet frequently practiced is incorrect because that option states a matter of opinion about prevalence rather than a legal rule. Whether a practice is common does not determine its legality and the exam is asking for the legal characterization under trademark law.

It is sometimes resolved as a civil dispute rather than a criminal offense is incorrect because the statement is misleading in this context. Many cybersquatting cases are indeed handled by civil litigation or administrative dispute resolution, but the defining point is that the conduct is unlawful under trademark laws and can give rise to civil remedies and in extreme cases criminal penalties under specific statutes or jurisdictions.

It is a lawful speculative domain buying strategy is incorrect because that describes a legitimate speculative activity only when it does not target third party trademarks. When the registration is done in bad faith to exploit a trademark the practice is illegal and is not a lawful general strategy.

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