Google is a famous mark. It is also "fanciful," which is a trademark term of art for made-up words. Fanciful marks are the strongest kind, and the famous ones, such as Google, Yahoo and Microsoft, are entitled to the broadest scope of protection.
It actually is against U.S. law to use the word GOOGLE in a domain name or otherwise as a trademark, in most cases, under the Lanham Act. See Lanham Act, Section 43, et seq., 15 U.S.C. 1125. The Lanham Act covers trademark infringement, trademark dilution and cybersquatting, and carries a possible maximum penalty of $100,000 per domain name. There might be exceptions for protest sites or parody sites, but the general rule is not in question.
That is not to say that every person who registers a GOOGLE derivative for a domain name will be sued, it only means that they run a significant risk of being sued. The tools available to uncover what domain names a particular person has registered make it fairly risky to engage in this type of behavior. Some trademark owners are aggressive and will sue without even sending a cease and desist lettter. Others may be willing to pay off a party rather than sue. There should be no mistaking what is illegal, however, from what may be a business decision to pay someone off a comparatively small amount to avoid having to spend legal fees.
Please note that this is an entirely different situation from registering domain names based upon dictionary words, which, depending upon the use to which they are put, is often legitimate.
Brett Lewis, Esq.
Lewis & Hand, LLP