The issue of using other’s trademarks or names as Google ad-words is both a legal and ethical one. If one has built up a reputation then others should not be allowed to use that as business leverage.
The FCAC is hearing an important case on the subject, see: http://arstechnica.com/news.ars/post/20080407-trademark-lawsuit-could-put-the-squeeze-on-google-adwords.html for more details.
The issue is being discussed in the UK at the moment, where Google has announced that it will allow third parties to use registered trademarks as search terms.
The first cases tried in the US, were brought by insurance companies and wallpaper suppliers whose names were used as search terms by competitors. The topic has been discussed in this blog before, where one Israel clothing company for the larger woman was using the name of their main competitor as a search term.
Arguably, such usage is not trademark infringement. In Israel, where there is a law against unjust enrichment, such usage would appear to be illegal regardless.
In this case, there are also hallachic considerations, where Jewish business ethics clearly prohibits setting up shop opposite a competitor to benefit from his customers.
Why am I raising the issue? Well I note that a patent attorney who should know better, has been using the name of a company, Newtone, that specializes in search services, as a google ad-word term. The patent attorney should know better. If sued, he’d find it difficult arguing ignorance of the law.
Then again Newtone is using the term Avtipus as a search term. Although arguably descriptive, since Avtipus means prototype, the word is the name of a well known prototyping service that is a client of mine, that helps small time inventors get patents.
Such searching and prototyping services are skating on thin ice as well, since arguably they provide legal services, which, under Israel Law is the sole prerogative of members of the Israel Law Bar, appart from exceptions such as licensed tax consultants, accountants, patent attorneys and the like.
Offering patent consulting services without a license is illegal. licensing is there to protect the consumer, and If sued, one would expect unlicensed service providers to be automatically culpable by virtue of providng services not qualified to give.
There are a number of self-styled, unlicensed patent consultants. These include ex-paralegals, trainees who have not yet passed their exams, or who lack a science or engineering degree, retired examiners who never qualified as patent attorneys of attorneys-at-law, etc. Recently I’ve tried to help customers undo the mess caused by such individuals. If the Association of Israel Patent Attorneys was (more) active, they could stamp out the phenomenon, but I don;t even remember the last time they held an annual general meeting or elections.

searching & prototyping are not legal services. representation is. consultation is.
perhaps you think that all unrepresented applicants who draft their own specification should be charged as well…
Sharper, there is absolutely no problem with inventors drafting and prosecuting their own specification. Noone is required to use legal representation for protecting their IP or for any other legal matter.
There is a great book called “Patent It Yourself” – well worth reading, but the idea of do it yourself patenting is inherently risky and not to be recommended. If one pays for professional services in a regulated field where practitioners are supposed to be trained, and examined for competence before being licensed, they should indeed be licensed.
You can diagnose your own illnesses, but medicine should be practiced by trained and educated doctors, not quacks.
That said, you are right that prototyping and searching are not legal services. Providing legal opinions regarding patentability or inventive step is. Thus coming to a conclusion based on a search is something that only a lawyer or patent attorney is licensed to do. Advising a client whether an invention is patentable in Israel or abroad, helping filing applications, advising on answering office actions and the like, are services that an inventor can do himself, but which only attorneys or patent attorneys are licensed to do in Israel. The laws are different in different places. Anyone can represent clients before the United Kingdom Patent Office. In the US, a regular attorney-at-law cannot practice before the patent bar, but patent agents cannot file trademarks on behalf of clients. Non-Europeans cannot represent themselves before the European Patent Office.
The case law in Israel concering the issue of using other’s trademarks or names as Google ad-words is clear. Such use is permissable.
see: http://www.nevo.co.il/Psika_word/mechozi/m06506-padi.doc