The issue of ads inside of the suggestions made by Google’s Suggest Function has already been dealt with in great detail in a previous post, at the beginning of February. My conclusion back then was that:
[…] The question of trademark use in relation to ads inside of ‘Google Suggest’ shall be judged quite similar to the use TM in ordinary Keyword Advertising. It has to be noticed however that the suggestions, relating to a query entered by the user and containing a TM, are offered in real time and close proximity to the user’s query. Thus the chance that users might see a correlation between the search term entered and the ad displayed might -contrary to ordinary Keyword Advertising- be higher. Seeing a correlation between the ad and the user query would thus be the key for the (main/essential) trademark function (indication of origin) being impaired.
From an unfair competition point of view the “distracting presumptive customers” argument (“Abfangen von Kunden vor dem Geschäftslokal eines Mitbewerbers) shall not be applicable due to the early stage of the search, while however the “passing off / slipstream riding/coattail-riding” argument (schmarozerische Rufausbeutung) might be valid one as users are more likely to see a correlation between their query and the ad. […]
Back in February this was all mere speculation. Today however I stumbled across following suggestion (ad?) while searching on www.google.us searching for the term “Pizza“.
As the term “Pizza” is of course not covered by any (e.g. TM, or company name) protection this fact/screenshot on its own isn’t too exciting, but I think things would indeed get very interesting if Google were to expand this service also to other (probably even protected) terms and to other countries…