The European Court of Justice (ECJ) recently held that Google is not liable for trade mark infringement with its AdWords system.
The argument was that by permitting adwords account holders to use the trademarks of well known brands as keywords, Google was permitting trademark infringement. The complaint comes from well known brands concerned about losing traffic.
The ECJ decided that Google didn't have enough control over the choice of adwords by adwords account holders to be held liable. You might have noticed the following statement on the keyword tool page:
You are responsible for the keywords you select and for ensuring that your use of the keywords does not violate any applicable laws.
An alternative argument is that a person using trademarks as keywords when they have no entitlement or association with the company owning that trademark, could be participating in misleading and deceptive conduct; a consumer law offence in many countries.
Court is not the first resort. Google has its own complaints system. All you need to do is demostrate that a trademark is yours, registered or not, and Google will investigate misuse. The complaints form can be found under the "About Google" link in Google information.
The simple message? Beware of how you use other company's trademarks. The biggest brands have the money to pursue you in court if you hit their bottom line. You don't even have to be the main problem, you could just be the 'example'.