Yes, there probably need to be rule changes but I stand on the basic principle that registrars cannot haphazardly just sell a domain name that is illegal for someone else to use.
That's my point though - how do they know at point-of-sale if it will be used legally or illegally?
- Toyota is a tm. What if I register WestPodunkToyota.com? Am I squatter or am I an authorized dealership and thus allowed, per my relationship with the company, to use the name?
- There are a couple of tm's for Apple. I register Apple dot sometld or Applesomething.com. Am I a squatter? What if I have a company called Apple which manufactures chimney flashing or something?
- Verizon is a tm. What if I register a bunch of Verizon--- names and typos? Am I a squatter or was I assigned the task of making defensive registrations for the company? Or if I'm a consultant for a business registering domain(s) for a new project I was hired to do?
- Disney is a tm. I register Disney-something.com What if I'm making a nonprofit site where people can voice their complaints?
It isn't "illegal" until the domain is used or abused.
If they auto-block seemingly "blatant" squats ...
- Company B wasn't considered "blatant" enough to include in the block list. Company B sues them because they blocked malicious registrations for Company A but not Company B.
- Someone prevented from registering a domain in good faith for a perfectly legal purpose sues them for hindering their business.
If tney manually look at every registration request and decide whether or not to allow it, reg fees will go up and registering a name will take forever. If the "raters" make a mistake ... see above.