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I was contacted by the original owner of a domain to give him the domain that I backordered a few weeks ago. The domain was abandoned for about 2 months before I bought it to eliminate the competition of my client but now I am faced with a threat that he will take this matter to court and AUDA (.au domain administration limited).

Am I supposed to handover the domain that I have bought legally? I would like to know my rights in this situation.

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If they let it expire and you then registered it then it's yours legally. They're most likely just trying to scare you into giving it up. A letter fro a lawyer telling them to back off should be enough to get them to leave you alone. – John Conde Nov 4 '13 at 3:03
Thanks John. I am not sure about AUDA's policies on this matter (tried calling them but no one answered my call) since .com.au domains and Australian business names seem closely tied and previous business owner's threat is based on the ownership of business name. – vDog Nov 4 '13 at 3:15
If you bought it to 'eliminate the competition' and not using it in good faith then you are breaching the registry terms and it can be taken away if anyone with a reasonable claim disputes it. – JamesRyan Sep 26 '14 at 13:47

I'm not specifically familiar with Australia law. Generally, domain names can be forced from you for trademark infringement reasons. If you own a domain name that is somebody else's trademark, then they can usually use legal processes to get it back from you.

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