Google Inc should defend a trademark lawsuit by Rescuecom Corp over advertisements linked to keyword searches, a U.S. appeals court ruled on Friday.

The U.S. Court of Appeals for the Second Circuit in New York rejected a ruling by a U.S. District Court dismissing Rescuecom's litigation against Google.

The complaint's allegations that Google's recommendations and sale of Rescuecom's mark to Google's advertisers, so as to trigger the appearance of their advertisements and links in a manner likely to cause consumer confusion when a Google user launches a search of Rescuecom's trademark, properly alleges a claim, under trademark law known as the Lanham Act, the three- judge panel said in a written decision.

Google senior litigation counsel Catherine Lacavera said the company believed the claims were without merit and would continue to defend against them.

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, Lacavera said in a statement.

The case is Rescuecom Corp v Google Inc 06-4881 in U.S. District Court of the Northern District of New York.

(Reporting by Grant McCool; Editing by Tim Dobbyn and Andre Grenon)