Bill's got some information on a new patent from Google titled "Selectively delivering advertisements based at least in part on trademark issues" (at least they're descriptive, though I'm a fan of brevity). From Bill:

It's interesting in a number of ways. One aspect of it would serve a legal disclaimer in some jurisdictions to limit consumer confusion. In other jurisdictions, it may not serve an advertisement at all based upon the laws of that region. The document provides thoughtful technical framework for handling trademarks in ads.

Will it be implemented by Google? We can't tell for certain, because it is just a patent application. But it bodes well for Google that they seem to have a plan in place for handling these legal issues.

Some other members chime in about the efficacy of preventing trademarked slogans and names from ahving ads bid on them. I'm of a mind that if Gator (aka Claria) can pop-up ads for Orbitz when you hit Expedia, Google should be able to let advertisers bid for search terms like Geico and American Blinds. I must be missing the material difference (although I recognize the technical, legal one).