Domain hijacking is the process of transferring ownership of a domain name without the permission of the registrant (domain owner). This is usually done by hacking into their registrar account or tricking them into giving away their password, by pretending to be their registrar.
Reverse domain hijacking is where someone tries to claim the rights to a domain and use legal threats or UDRP (Uniform Domain Name Resolution Policy) action to have a domain transferred to them from the current owner who also has full right to own and the same domain.
For example, windows.com. Microsoft has a trademark on the terms “windows” yet a Windows (glass) manufacturer or a Construction Company that fits Window frames to buildings also have rights to use this domain legally… So if the glass manufacturer registered that domain first and Microsoft tried to get the domain off them using their trademark and going through UDRP or other forums, it would be classified as reverse domain hijacking.
Reverse domain hijacking cases are most often performed by a bigger company trying take a domain name from a smaller company, who also has a legitimate reason for owning the domain. They will usually start off with Cease and Desist letters and then launch a UDRP dispute, in the hope that they will intimidate the smaller company. It is argued that UDRP services will usually favor the complainant (person launching the dispute, and paying for it). So, often the larger company will be awarded the domain name, without opposition.
The smaller company does then have the option to dispute this in court, but this can be a very costly process, which most smaller businesses cannot afford.
So if you feel you have a legitimate claim on a domain, make sure to put in a response via the UDRP process, as by doing so, you are making it that much harder for the Reverse domain hijacker to get your domain name!