"Sasha" is a common enough name that the manufacturer could argue that it's not the one of First Daughters, but it would be a flimsy arguments.
Dover Books has published a President and Family paper doll series for years and they feature all of the presidents, including the G.W. Bush family. I do imagine that they did so with permission.
The Baby Ruth candy bar was allegedly named after President Cleveland's daughter.
I think that Michelle has to understand that she will have only a certain amount of control over the image of herself and her daughters and that she has to pick her battles.
However you know, I do understand the frustration that they must feel. What gives anyone the right to provide information on any detail about anyone's life?