I do think there is a distinct element here: the advertiser chooses the AdWord themselves, i.e. they are entering a keyword into Google's AdWord service and Google accordingly puts a sponsored link at the top of the results page whenever a user enters that keyword. I would argue that they are specifically using someone else's brand to promote their own products and that is something trademark law is concerned with. So does Apple in this case: they don't own the brand "iWatch", but they are using the name nonetheless to promote their own product. Of course that isn't enough to succeed in court, more would have to be demonstrated, but I can follow the reasoning.
To my mind, "Specifically using someone else's brand to promote their products" entails actually using the mark in public. If Hebrew National produces an ad that says, "Coca-Cola drinkers love Hebrew National frankfurters," they darn well better have Coca-Cola's permission.
Even if one can come up with an example that fits the hypothetical circumstance, I'd argue that this particular circumstance does not qualify. Probendi was not using that name in trade. There is no current product. No product announcement prior to this week (and that was verbal - there's nothing at their web site about an Android watch). A brand name only has meaning or value when the public associates it with a particular company, product, or service.
There is no conceivable way that a person searching Google for "iwatch" intended to find Probendi's product, unless this controversy piqued their curiosity. If the name is worth $27 million on the open market (as has been claimed), it is due solely to the fact that the press and public assumed that Apple's rumored product would have that name.
What you're arguing here essentially boils down to, "Nobody can buy an Adword that is a registered trademark, unless they own that trademark." Presumably, a hotel near Walt Disney World could not buy "Walt Disney World" as an Adword. Yet, since "Grand Canyon National Park" is not a registered trademark, a hotel adjacent to that park presumably
could buy "Grand Canyon National Park." (If the deep-pocketed, legendarily litigious Walt Disney Company hasn't been able to stop the practice, how far will Probendi get?) In fairness, if it's illegitimate to buy an ad if the target is a company with a trademarked name, it has to be illegitimate for targets with names that are incapable of being trademarked. The real "crime" (if crime it be) is unfair competition.
Speaking as a marketer for a moment... Probendi is really blowing its opportunity. They should be doing a far better job of selling their products and services at their web site - they'll never have better traffic at that site than they have right now. They don't even own "iwatch.ie" (or iwatch.it, iwatch.co.uk, iwatch.de, iwatch.com...). In fact, several of those are in use by other companies. They don't even have keywords in their meta tags! "SEO? What's SEO?"
Curiously, my searches did turn up a server security application named "iWatch." You'll find it at
http://iwatch.sourceforge.net It pre-dates Probendi's trademark by two years, appears to have been authored in the EU, and if Probendi had acquired it, there's absolutely no evidence.
There are some preliminary rulings by the ECJ about this: C-278/08 BergSpechte v trekking.at (the latter used the keywords "BergSprechte", among others), C-323/09 Interflora v Marks & Spencer (the latter used the keyword "Interflora"). Although the cases are more complex, the ECJ nevertheless accepts that using AdWords in that way can lead to a trademark infringement. Google itself would be absolved from liability under trademark law, they ruled that out in another case.
I have to take a "pass" on this - I'm in the U.S., so I'm unfamiliar with what the ECJ rules. I will note that, if a preliminary ruling in the ECJ is similar to preliminary rulings in the U.S., it's a matter of, "The case seems to have sufficient merit to warrant a full hearing." This is very common when there are unusual claims/novel interpretations of law.
