Buying Trademark Keywords is Legal? or Illegal?
Eric Goldman recently posted about the inconsistancy of trademark law protection in the courts:
2006 has been a bit of a jurisprudential disaster on the question of whether buying/selling keywords constitutes a trademark use in commerce. Basically, courts can't agree, so plaintiffs and defendants are trading wins--sequentially by date, the answer to whether keyword advertising is a use in commerce has been yes (Edina), no (Merck), yes (800-JR Cigar), no (Rescuecom) and yes (Buying for the Home). At least we have a predictable pattern emerging (consistent with the pattern, the next case should be a "no")...but the alternating pattern is hardly confidence inspiring.
Eric also highlighted that many of the plaintif companies which are suing over this issue also bid on other trademark terms.
Bill Slawski posted an article showing how some Google patents may look to help solve these legal issues, though if the courts aren't certain what is legal how can Google be?

They need to figure this out...
Not only is this annoying b/c of potential legal issues, but also from an SEM campaign perspective. G has flagged 1,000s of terms in their system as "trademarked" and they decline your ads if you inadvertently use one of these terms in your ad text. Many of these aren't brand names either, but very common terms. This becomes a big problem when you're running SEM campaigns w/ hundreds of thousands of kw's.
Law won't solve the problem
Even if the courts come down on the site of the trademark owner, it won't solve the problem.
SEMs still need to aggressively bid on their own brand as well as the 10-15 common variations and mis-spellings. It is hard to imagine those being protected by even the most inclusive decision.