The memorial fund set up in the name of the late Princess Diana - along with Diana's mother and sister - is being sued by an American company for £16m.

US-based Franklin Mint has launched the lawsuit in the latest twist of a row over a commemorative plate.

The Mint has accused Diana's sister Lady Sarah McCorquodale and her mother Frances Shand Kydd and the Diana, Princess of Wales Memorial Fund of "maliciously" fighting to retain the rights of the princess's name.

Lady Sarah and Ms Kydd are executors of Diana's estate.

The fund has branded the action "a waste of time."

Mint's legal success

In June, the fund lost an attempt to prevent the Mint producing Diana souvenirs, leaving it facing a £4m legal bill.

The fund and estate had argued the Mint's production of a "limited edition commemorative plate" soon after her 1997 death violated their "exclusive rights" to Diana's name and image.

The estate's action was thrown out after being labelled "groundless and unreasonable".

Now the company is counter-suing.

A fund spokeswoman said: "They are suing us for malicious prosecution.

"We are seeking advice. It's a lot of money they are demanding but, as far as we're concerned, it's a complete waste of time and brought about in very bad blood.

"They have had their cash and won the case - they should let sleeping dogs lie.

"We brought the case in good faith based on legal fact, rather than a malicious whim."

The Franklin Mint is claiming that in 1998, Diana's estate "decided to run a public relations campaign".

It says the estate launched legal action against the mint "on the theory that a high-profile lawsuit must be pursued to send a message to others".

But the US-based company claims the action was "merely an effort to damage the Franklin Mint's sales efforts, embarrass it and sully its reputation".

The mint is seeking punitive and exemplary damages.

A spokesman for the Spencer family did not wish to comment.