Wayward Ditch Pig
A couple of clients from several years ago were early Google guys and one of them actually posed this question to me in our meeting, regarding what's the best course of action if someone comes calling for a domain you own. The only thing I'd add is that you need to populate the domain prospectively, and not after they come calling. Otherwise it can put a crimp in the legitimate purpose argument.
Yeah, that's my understanding of the underpinning philosophy of most cyber squatting legislation. The bigger, better known entity doesn't have the right to the domain just because they're bigger and better known, but the owner needs to show that the webpage is a property owned and operated legitimately for literally any functioning purpose other than waiting to be purchased by the entity that makes the domain valuable.
The common practice years ago was exactly what I laid out. Buy the domain, start a blog, hire out to have a few original blog articles written, link to some other blog articles and youtube video. It doesn't have to be a good, entertaining blog to establish that it's my property and that the use of the disputed name/term was coincidental. It just has to look like it's there for a purpose, any purpose.