What are the liability associated with registered domain names?
First of all, the legal protections over "ownership" and the question of liability as it pertains to the Internet are arguably still very much new and somewhat uncharted territory when it comes to the law.
In order to be a successful business in today's society, it is almost imperative that you have a company website. In fact, most businesses today consider their website and their domain name one of their most valuable assets. Because the Internet is now the primary tool for making connections, most businesses rely on it for the bulk of attracting new customers. Domain names, therefore, become directly associated with the businesses themselves.
Liability, therefore, comes in the form of other websites with similar domain names that attempt to profit from drawing Internet consumers originally looking for something specific, to something either fraudulent, or a company working in adverse competition. The liable party could be sued for damages and/or an injunction to remove the website and revoke rights to the domain name.
Take the current health insurance marketplace debacle as an example. In light of the current problems the website is experiencing and the resulting media coverage, several other websites have since popped up in an attempt to profit from the sheer volume of people seeking to get on the marketplace to buy insurance. Some of these websites are just plain fraudulent, stealing consumer's personal information and profiting from identity theft. Others are legitimate health care providers attempting to use deceptive sales practices to gain customers. All have one thing in common. They optimized search engine terms and/or used similar domain names to divert those attempting to land on the governmental health-care website. Using similar domain names, website layouts, and even flat out falsely claiming to be part of "Obamacare" these websites could be held liable both criminally and civilly.
See the articles below for more information regarding this example as well as general information regarding the policing of the Internet.
ASIDE: because the "policing" of the Internet is such a difficult thing to do, many companies will buy every domain name that is similar to the one they use, in order to prevent someone else from having the opportunity to draw traffic away from their own site.