I think that the problem for Google lies in trademark law itself, as it forces companies to jump through needless hoops for the sake of appearances. If a company is seen as taking a non-defensive stance of its trademark, it is more likely to lose it, regardless of the context in which the defense is made. No distinction is made for dictionaries and related ilk, who, while they are for-profit endeavors, can't be said to be competing with Google.

ADS-L is right - the word should be there - it's being used and a good dictionary is an honest reflection of usage; but Google has no choice either. When the time comes where Google *is* in court with a real trademark infringement case, a lack of a preemptive defense will garner less sympathy with the law.

Trademark dilution happens glacially over time though, so it's difficult to pin down instances where it's 'obviously ok' for a trademark to be used outside its allowable use. You'd think that maybe dictionaries could be singled out as being such a case though, perhaps if accompanied by disclaimerese from the trademark holding company as a suitable compromise.