I think what they say is not necessarily legal because they are the owners of the domain, during the auction process, and if trademark holder made them aware of their trademark, and they still sold the domain, they would be in breach of the trademark laws. (IMHO. But I'm not a lawyer). I also think, if this scenario was to play out, that it would be dubious if they could pass their liability to the auction winner (But I'm not a lawyer, and it may be legal to do that. Bu it sounds doubtful to me).
I think they would be obliged to stop the auction, or possibly fall foul of infringing your trademark. The trademark holder would need some fleetfooted attorneys to process the paperwork during the period of the auction.
But this troubles me...
We do not review domain names that users backorder and bid on in the system, and if you own rights to one or more trademarks you agree that you release DropCatch.com from any legal claims because of users in our system. Should we be sued or threatened with a lawsuit in connection with a domain that was purchased through this site, you hold us harmless and indemnify us from your purchase and use of said domain name(s)"
But hear they are talking about the rights of the trademark holder in the first sentence, but jump to the rights of the auction winner in the second sentence. I think they are confusing thing up by not having these 2 sentences in separate paragraphs. I really wonder if they can legally pass all liability for their own trademark infringement onto the winner of the auction (It may be possible. But I'm not a lawyer).
Is it even a reasonable legal argument that because they haven't done any research into the domains they have captured, they are not aware of any trademarks for that domain. What if the domain was a household name, like IBM, Nintendo, Bluetooth, or Nissan?
Shouldn't they be obligated to do a trademark search before capturing a domain? (Rhetorical question).