Now the ABC-123 Toy Company owns the trademark for “ABC 123” and has decided to begin a new toy line under the name. They registered the TM a couple of years before, but have not been using it up to this point. When they go to register the domain, they see that the domain owner who recently purchased the domain is asking $10,000 for it.
They have three options: offer to buy it, sue to take it, or inform the owner of the infringement and see if he or she will hand it over. In the first case, a lot of trouble and attorney fees can be saved, but a lot of money is spent regardlessly. In the second case, the fight could drag out and end up costing more than the purchase price. In the third case, the seller may not have any plans to hand it over and might jack up the price now that he knows someone really wants it.
Except that in the third case, the seller has now been informed that someone owns the TM for the domain they have and so the only legal buyer is now the ABC-123 Toy Company. If the seller attempts to sell to another party, or does sell to another party, then the seller or the new owner can be taken to arbitration and will almost certainly lose the domain with no recompense from ABC-123 because the seller had previously been informed that the domain name infringed on a trademark.
That opens a new can of worms for the seller, who is now likely liable under the law for fraud.