Google has revised its policy on trademarks appearing in keyword ads, allowing brand names to appear in AdWords copy.

Google will begin accepting new ads that contain trademark terms on Friday although the ads will not begin appearing online until June 11, Dan Friedman, a member of the Inside AdWords crew, announced Thursday in a company blog:

In an effort to improve ad quality and user experience, we are adjusting our trademark policy in the U.S. to allow some ads to use trademarks in the ad text. This change will bring Google's policy on trademark use in ad text more in line with the industry standard. Under certain criteria, you can use trademark terms in your ad text in the U.S. even if you don't own that trademark or have explicit approval from the trademark owner to use it. This change will help you to create more narrowly targeted ad text that highlights your specific inventory.

For example, under our old policy, a site that sells several brands of athletic shoes may not have been able to highlight the actual brands that they sell in their ad text. However, under our new policy, that advertiser can create specific ads for each of the brands that they sell. We believe that this change will help both our users and advertisers by reducing the number of overly generic ads that appear across our networks in the U.S.

The move comes on the heels of a lawsuit filed against Google by Firepond, which makes sales management software, over whether the search giant should be allowed to sell keywords bearing a company's trademark to its competitors. A similar suit involving PC support company Rescuecom was brought back to life in April by an appeals court after initially being dismissed in 2006.

Rescuecom and Firepond argue that their respective keywords are an extension of the trademark they have acquired on their brands, and that Google should not be encouraging competitors to violate that trademark by using it to promote their own products.

AdWords allows anyone to bid on a given keyword and win placement on the top or right side of a search results page based on a combination of factors such as the size of the maximum bid for that keyword as well as the quality of the ad.