Monday a French court, the Tribunal de Grande Instance de Nanterre, 2ème chambre ruled in Sté Viaticum et Sté Luteciel c/ Sté Google France that Google France violated the trademark rights of a complainant when it displayed a competitor's sponsored links (via its Adword program) in response to a search for the plaintiff's trademark. The decision is subject to appeal.
Google's Adword Trademark policy offers limited review; it's mostly 'let's you and him fight'.
There is one US case that I know of which discusses the issue in the context of serving banner ads, Playboy Enterprises, Inc. v. Netscape Communications Corp., 55 F.Supp.2d 1070 (C.D.Cal., 1999), but it's only a district court, and fairly fact-specific. The court just wasn't persuaded that the use of the terms “playboy” and “playmate”—which it thought generic—was infringement. Even if they weren't generic, it said the banner ads were not infringing or dilution since they clearly advertised something other than the plaintiff's magazine or in any way interfered with the association between the plaintiff's mark and the product. (There may be more cases (there certainly are on meta-tags!), I haven't done a search on this recently.)
The very reliable Trademark Blog has in the past suggested that the US law in this surprisingly complex area is unstable, which seems fair enough as a descriptive matter. But I hope the French rule isn't adopted here.
