Duel of Los Angeles

The Battle of Malibu was caused by Obadiah Stane, who wanted to be CEO of Stark Industries. After he was noticed as a ally to the Ten Rings, he got into his armor and started the battle against Tony. The coverup name for the battle is Incident at Stark Industries.

Background
Obadiah Stane tries to get his scientists to make a smaller version of the Arc Reactor, like Tony Stark did. They failed, so Obadiah broke into Tony's house and temporarily paralyzes him with a sonic weapon. Obadiah yanks out the power source from Tony's heart, taunting him all the while. After he leaves, Tony realizes that he has only one hope for survival - the preserved Arc Reactor that Pepper gave him in a display case. He gets the power source installed just as Rhody arrives.

Pepper, Coulson and several other agents arrive at Obadiah's research facility. They spot the Mark 1 Armor and a storage location where something else was kept. Just then, a gigantic robotic suit comes to life and attacks them - it's Obadiah's counterpart suit, code-named the Iron Monger.

Rhody watches Tony suit up, awestruck at the Iron Man armor. As Tony flies away, Rhody looks at the prototype flight suit Tony built earlier, thinking he should use it to help Tony. He then decides against it.

Battle
Iron Man arrives and begins to fight Iron Monger. J.A.R.V.I.S. warns Tony that he has only about half power in the suit; the older power source wasn't designed to work alongside the newer suit. Iron Man, after being beaten by his nemesis, attempts to flee from the battle scene. However, Iron Monger counters this by flying after him and carrying him high into the sky. Iron Monger, as he thinks he has the upper hand, instantly freezes up as he goes higher into the atmosphere, freeing Iron Man in the process. Iron Monger crashes in the Stark Industries building, and Iron Man falls moments after, his battery running out of power. The two fight again. Tony instructs Pepper to overload the building's Arc Reactor, which will generate a shockwave strong enough to knock out the Iron Monger's suit. Pepper is hesitant, believing that Tony could also be killed. Tony manages to keep fighting while she builds up power to the Reactor. The Arc explodes, taking out Obadiah and injuring Tony. But the energy wave from the Reactor also manages to re-charge Tony's heart battery, saving him from death.

Aftermath
Tony and Rhodey are taken to a S.H.I.E.L.D. facility where Agent Coulson taught Tony how to fight when in battle.

Days later, Rhody holds a press conference about the incident. Tony is impressed with the newspaper's coming up with the name "Iron Man," and plans to adopt it. Agent Coulson has released cover stories about Obadiah and the "truth" about Iron Man (who will be referred to as Stark's bodyguard). Pepper thanks Coulson but cannot remember the full name of the group he belongs to. Coulson just tells them to call it S.H.I.E.L.D. and states that they will be in touch again.

Tony goes before the reporters once more, and prepares to comply with the cover story. But, before he can even start, Tony Stark throws away his notes and declares "I am Iron Man."