A friend recently asked me how Google AdWords handles trademarks. This is a question I have had to struggle with myself, so I thought it would be useful to summarize the results of my research here. The two big aspects to it are the use of trademarks in ads and the use of trademarks as keywords that trigger ads.
It turns out Google does not have a single editorial policy on trademarks, but a different one in each country. The gist of the situation is this. Google's own general position on trademarks is that keywords can be used to trigger anyone's ad copy AND be used in ad copy, whether or not they are trademarked. This is consistent with the trademark laws of some countries, and in those countries the advertiser can bid on any keywords and use them in ads. Nevertheless, even in those countries, the trademark holder may file a specific exception request with Google. In that case, other advertisers can still use the keyword to trigger ads, but the trademarked keyword may not be used in the ad copy itself within the same industry. To the best of my understanding, this describes the situation in the USA. Trademark policies in France are, by contrast, more rigorous: there are laws against using others' trademarks in any fashion in PPC campaigns. But in most regions, Google itself does not disable your account or your keywords for trademark use.
Google's Trademark Policies Can be viewed here:
AdWords Trademark Policy - Advertising Policies Help
If you want to protect your trademark, the exception process is clear enough, as can be seen at the above resource. You fill our the paperwork. Google will need to confirm that you indeed own the trademark. Once this process completes, competitors' ads that contain your trademark should be disapproved (this affects only ads in your industry, not any ads in other industries that may contain your trademarked term). (By the way, competitors' "static" ads that contain the trademark may get disapproved, but you still need to worry about dynamic keyword insertion!)
In some cases, enforcing the trademark restriction makes no sense for the trademark holder. For example, Reeboks are sold in many stores, and Reebok wants those stores to be able to advertise and sell their product.
Although using trademarks in ad text may not be illegal, it is generally considered inappropriate unless you are a reseller. According to Weller and Calcott, in the US and Canada, it is considered legitimate to use another's trademark in ads in some situations such as:
-- The term is also a descriptive word, and it is used descriptively and in a generic way without reference to the trademark.
-- The term refers to the correct trademark and you are either an appropriate reseller; a seller of components, replacement parts or compatible products associated with the brand; or an informational resource providing relevant information.
It is important to note here that the laws of the country you are advertising in are separate from Google's policies. Google may allow you to use trademarks in advertising, but this does not mean the trademark holder cannon sue you anyway. This is all the more true if the trademark is the company name. What is more, a competitor may sue you for using his trademark even as an ad-triggering keyword. They may not have a case, but who wants a legal hassle anyway.
One last tip I would like to add. Have you got an annoying competitor who uses your brand name in his ads? Is it too much trouble to fight a battle over it? Well, at the very least you can use his brand in your ads, if that helps!
Note: In addition to Google's information I have referred to Brad Geddes, Advanced Google AdWords (Wiley, 2010); Anastasia Holdren (Google Adwords, O'Reilly, 2012); and Bart Weller and Lori Calcott, The Definitive Guide to Google AdWords (Apress, 2012).
I hope this is of some use!