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If I purchase a domain of some celebrity name like madonna.com, is it illegal?
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Most likely - yes. If you are actually planning on launching a fan site or a criticism site, you might be able to get away with it.
Here is an incomplete list of personal name decisions that I try and keep up to date:
http://randazza.wordpress.com/2007/0...-and-the-udrp/
However, if you're relying on how the UDRP decisions come out on this issue, you're only doing half your homework. If it is a .com, the domain will be subject to US law as well, and 15 USC s 1125(d) applies to personal names of celebrities, and 15 USC s 1129 applies to all personal names.
Naturally, if you are in Pakistan, I would imagine that you would be able to keep your assets away from a US lawyer, or just that it would be too much of a pain in the ass to track them down. However, if you have a large .com portfolio, don't think that a good lawyer couldn't foreclose on your domain names for unpaid judgments.