Have you tried encoding the product name on paypal?
You really have two options
Remove the characters from your product names.
or
Log into your PayPal account at https://www.paypal.com
Click the Profile link
Click the Language Encoding link under the Selling Preferences column
Click the More Options button
Choose ISO-8859-1 from the Encoding drop down menu
Select Yes for ‘Do you want to use the same encoding for data sent from PayPal to you (e.g., IPN, downloadable logs, emails)?’
Click Save
Please let us know if this works or not.