I using the name of a celebrity in a domain illegal?

While I agree with what mjewel and Dave Zan have said, I want to point out that there is some ability to use trademarks without infringing. While there is a very thin line (which is often difficult or impossible to discern), you can use a trademark to engage in legitimate commentary. You have to get around arguments such as likelihood of confusion, passing off and, in the case of domain name disputes, abusive domain name registration.

What is a legitimate use? That's hard to say. The health club operator Bally’s sued a domain owner for service mark infringement based on defendant’s registration of the domain name <Ballysucks.com>, which he used to voice complaints about Bally’s health club business. The U.S. District Court for the Central District of California granted the domain owner's motion for summary judgment and dismissed the complaint because it found that Bally could not prove a likelihood of confusion with its trademark.

Similarly, a WIPO Panel held in Lockheed Martin Corporation v. Dan Parisi, Case No. D2000-1015, that Complainant, Lockheed Martin Corporation, failed to show that the disputed domain names were confusingly similar to its trademarks. Therefore, the Panel ordered that the disputed domain names <lockheedsucks.com> and <lockheedmartinsucks.com> remain registered in the name of the Respondent, Dan Parisi.

However, in many other -sucks.com cases, WIPO decisions have been in favor of the trademark owner. Usually, the losing domain owners are found to be acting in bad faith.

The logic supporting the use of a trademark for legitimate commentary is not limited to criticism of the trademark owner. Favorable commentary should also be covered. But the scope of the use is obviously very fuzzy.

Also note that even if you win, it will take time and money to fight a well-financed trademark owner, so put that in your calculations.

 

That depends on how you define "public figures". Government officials, maybe,
but not figures well-known to the public that make money using their names.

Then again, even that is fuzzy.