What does cybersquatting refer to?

Cybersquatting specifically refers to the practice of registering domain names that are similar or identical to existing trademarks with the intent of selling those domain names for profit. This is typically done with the expectation that the trademark owner may be interested in purchasing the domain to protect their brand or to redirect traffic that might mistakenly reach the cybersquatter's site.

The significance of this practice lies in the potential legal issues it raises, as it often involves the infringement of trademark rights. Trademark owners have the right to protect their brand identity, and cybersquatters exploit this by capitalizing on the confusion that can arise from similar domain names.

In contrast, registering common words as trademarks or creating similar company names may involve different legal and ethical issues but do not fit the specific definition of cybersquatting. Additionally, the use of trademarks in online advertisements also falls under different regulations and is not classified as cybersquatting. Thus, the definition provided in the correct answer captures the essence of what cybersquatting entails within the realm of trademark law and online business practices.