They can only sue if it infringes on their brand recognition. Mattel likes to sue anyone who opens as business with "Barbie" in the name, because they feel it infringes. They just lost a recent court case and a restaurant in Quebec gets to keep their name since they are different enough. Same with a small store here in town. It was called Barbies fashions (or something like that - it is a clothing store) and she received a letter from Mattel's lawyer as well. I thing she won her case as well (although the one in Quebec went further).
Edit: Here is the story of the Quebec restaurant
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"The problem with any ideology is that it gives the answer before you look at the evidence."
—Bill Clinton
"The greatest obstacle to discovery is not ignorance--it is the illusion of knowledge."
—Daniel J. Boorstin, historian, former Librarian of Congress
"But the Senator, while insisting he was not intoxicated, could not explain his nudity"
—WKRP in Cincinatti
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