I found one thread that indicated that Google would disallow the term as a keyword if the trademark owner complained. A later thread (April 2004) indictated that there had been a change in policy -- that the a competitors trademark could be used as a keyword, but not in the ad itself.
"When we receive a complaint from a trademark owner, we will only investigate whether the advertisements at issue are using terms corresponding to the trademarked term in the advertisement's content. If they are, we will require the advertiser to remove the trademarked term from the content of the ad and prevent the advertiser from using the trademarked term in ad content in the future. Please note that we will not disable keywords in response to a trademark complaint."
So looks like trademarks are fair game for keywords.
So, I'm okay to to have 'bluewidget' as a keyword (perhaps as the one and only keyword) so long as I don't say "Buy Redwidgets, they're heaps better than bluewidgets"
fish_eye, a really accurate answer to this question would depend on a number of factors, such as in what countries the trademark rights are held, to what countries your ads are targeted, and so on.
For this reason, trademarks used in ads and as keywords are addressed by the review teams on a case-by-case basis.
Please follow the links below for more info from the AdWords FAQ:
What is Google's trademark policy?
[adwords.google.com...]
Trademark Complaint Procedure
[google.com...]
AWA
