Can you legally name your domain after the product being sold?

[Tera]

Was what you read related to Google's Exact Match Domain (EMD) update? Marketers tend to buy keyword rich domain names. Like you said, it makes sense to use terms that people are searching on, right? Google's line of thinking is that a lot of EMD sites are very low quality.

Google’s Matt Cutts (head of the web spam team) announced a new Google algorithm change in September of 2012. He says it will reduce low-quality “exact-match” domains in search results.

That doesn't mean you can't or should use them, but make sure you have quality content and then you'll be ok. In other words, follow Google's webmaster guidelines.