Google said it continues to believe the lawsuit is without merit and that it will continue to defend itself. "We are disappointed with this early-stage decision, but we remain confident that our trademark policy strikes the proper balance between trademark owners' interests and consumer choice," Catherine Lacavera, Google senior litigation counsel, said in a statement.

Meanwhile, Rescuecom expressed satisfaction at the court's decision. "We're very happy with the Second Circuit's decision. It discredits Google's argument that it should be permitted to auction off tradenames," said Rescuecom CEO David Milman in an interview.

"Rescuecom is seeking to protect its rights and we would like Google to stop this practice and creating confusion with the Rescuecom branding," he added.

Google's on this matter states in part: "Our AdWords Terms and Conditions with advertisers prohibit intellectual property infringement by advertisers. They make it clear that advertisers are responsible for the keywords they choose to generate advertisements and the text that they choose to use in those advertisements."

Competitors continue to buy "Rescuecom" as a keyword to trigger their ads, as evidenced by a query run on Friday by IDG News Service.