Arnie to terminate doll
The former action film star's production firm filed the suit against Ohio Discount Merchandise (ODM) claiming its Schwarzenegger doll exploits the California governor's commercial appeal.
The family-owned toy company said the "bobblehead" doll was a political joke and a share of the profits would go to a cancer charity.
The company's best-selling toys include parodies of Jesus Christ and Anna Nicole Smith.
Schwarzenegger wasn't amused by the $19.95 (£11.25) doll, which is dressed in a grey suit and carries an action movie style machine gun.
"No other politician has done this," ODM president Todd Bosley told the New York Times. "Jimmy Carter sent me a book. Hillary Clinton signed one and sent it back to me. Rudy Giuliani carried his around with him to several of his speeches."