I don't want to speculate on the details of why the manufacturer failed to be profitable during those 8 years. I'm not sure anyone other than her has enough information to render such a diagnosis. Like all such stories, it's a complex and unique situation. I can, however, take a step back and see the overall pattern: as is so often the case, people trusted IP to help them get rewarded for their invention, and instead it prevented the invention from helping anyone at all, least of all the inventor. Intellectual property has not yielded a desirable outcome, and it rarely if ever does so, but counterexamples are abundantly available. Literally any other strategy is better than a known bad one. An even worse strategy still teaches more than a known bad one.
But the problem with IP isn't simply that it's a bad strategy. In fact, the problem isn't IP at all. IP is the symptom. The problem is the mindset and goals of the inventor, as evidenced by the use of IP. Why did the inventor create the toy? Was it to get rich, or to (for lack of more specific information, I will say...) make people's lives just a little bit brighter? If her goal was to get rich, her strategy of inventing a toy to get rich is horrible. Inventing widgets is one of the hardest ways to make money. Thus if her goal is to get rich, she failed because her strategy was not designed to realize her goal. To get rich, a better strategy is going into banking. Federal Reserve Notes are monopoly money, so the best way to get them is to be Hasbro, which can print them to its heart's content. :-P
Was her goal then to brighten people's lives? If so, then I think we must agree that she succeeded in her goal, albeit only after pruning the self-destructive strategy of using a patent. If this was her goal, the patent is a strategy directly inimical to her goal, thus it makes sense that she accomplished little until abandoning such a terrible strategy.
Now, of course this still feels incomplete, and indeed it is. We still don't have what we actually wanted. What we actually wanted was for the inventor whose goal was to brighten people's lives, and who succeeded in achieving that goal, to be rewarded for her efforts. But this didn't happen. Why not?
To unravel that knot, we must first consider that one goal of money is to reward such inventors for their work. Money, being a technology, albeit an old one, was invented to serve this purpose (or at least, it's illustrative at present to suppose it was). It is a decentralized reward mechanism which flows from consumers to producers, and inventivizes all to produce more than they consume. The degree to which money flows to a person should parallel the degree to which they produce more than consume. Why doesn't it do this?
Well, that's a very complex problem, which no doubt stems from many bad strategies implemented by inventors and many others. The world has been convinced to adopt a lot of self-destructive strategies, and we are seeing the consequences of those. But in the case of money not reflecting value creation like it should, we need look no further than the strategy represented by the Federal Reserve Notes people have been given to use as money. Those notes are not intended to work as a good money; in fact, quite the opposite, they are designed to implement the abstract interface of money*, while providing a very different result entirely: to transfer economic energy from the users of the money to the printers. In short, if we want our money to start reflecting value creation correctly, we need to stop using this monopoly money that is designed to accomplish something fundamentally different, and even opposite.
Will that solve all of our problems? No, but it will simplify them more dramatically than any of us can predict, and from there it will be much easier to see the next biggest failing strategy.