I covered this in my book and on this site, and it’s an ongoing issue for Google and the whole keyword industry. From CNN:
A judge on Wednesday refused to dismiss a lawsuit against Google charging that the Web search leader’s AdWords program abuses trademarks.
In making his decision that effectively allows the case to move forward, U.S. District Court Judge Jeremy Vogel ruled that the public has an interest in whether Google (Charts, Fortune 500) AdWords violates U.S. trademark law.
American Blind & Wallpaper Factory, the top U.S. reseller of window blinds, charged in its lawsuit that Google abuses trademarks by allowing rivals of a company to buy ads that appear when consumers search the Web for information on that business.