Kehoe Component Sales Inc. v. Best Lighting Products, Inc.
796 F.3d 576
6th Cir.2015Background
- Best (designer/marketer of exit signs/emergency lighting) contracted Pace to manufacture products and taught Pace specialized manufacturing "know-how" and tooling. Pace had not previously made such products.
- After fulfilling Best orders, Pace used the same tooling to produce thousands of identical units and sold them under Pace’s name to Best’s customers. Relations deteriorated; parties executed a one-year Supply Agreement (Jan 2007–Jan 2008) with non-compete, assignment, and tooling-use provisions.
- Best alleged misappropriation of trade secrets, Lanham Act violations (reverse passing off and false advertising), conversion, breach of warranties, tortious interference, and breach of contract. Pace sued for unpaid invoices; cases were consolidated and tried to the bench.
- The district court found Pace liable on most claims, awarded compensatory and punitive damages, attorneys’ fees, and a permanent injunction. Pace appealed.
- Sixth Circuit affirmed breaches of contract (non-compete, assignment, tooling-use) and tortious interference; reversed trade-secret, Lanham Act, and conversion findings; vacated warranty ruling and damages/fee/injunction awards; remanded for further proceedings.
Issues
| Issue | Best's Argument | Pace's Argument | Held |
|---|---|---|---|
| Timeliness of OUTSA claim (statute of limitations) | Misappropriation was continuing; later sales (post-2007) restarted the limitations period | First discoverable misappropriation occurred Aug 2004; OUTSA four-year period bars later filing | Reversed: OUTSA claims time-barred—limitations runs from first discoverable misappropriation (continuing misappropriation is a single claim) |
| Lanham Act reverse passing off (§43(a)(1)(A)) | Pace falsely designated origin by selling products that embodied Best’s designs as Pace’s own | Pace manufactured the tangible products; under Dastar "origin" means producer of tangible goods, so no false designation | Reversed: No Lanham Act liability—Pace produced the tangible goods and did not falsely represent who manufactured them |
| Lanham Act false advertising (§43(a)(1)(B)) | Catalog representations misled customers about product origin/author | Misrepresentation about intellectual origin is not a characteristic actionable under §43(a)(1)(B); only false statements about product characteristics or geographic origin qualify | Reversed: No false-advertising liability for misrepresenting intellectual origin |
| Conversion for retaining tooling (post-Big Wash tooling) | Pace wrongfully retained Best-owned tooling after Best demanded return | Pace had a statutory molder’s lien for unpaid amounts, permitting retention until paid or bond posted | Reversed: No conversion—valid statutory lien authorized retention of tooling |
Key Cases Cited
- Peabody Coal Co. v. Dir., Office of Workers’ Comp. Programs, 718 F.3d 590 (6th Cir. 2013) (standard of review for statute-of-limitations legal questions)
- Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003) ("origin" in §43(a) means producer of tangible goods, not the author of underlying ideas)
- Tandy Corp. v. Malone & Hyde, Inc., 769 F.2d 362 (6th Cir. 1985) (laches framework for Lanham Act timing)
- TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001) (distinction between protection for functional/design features (patent law) and trademark law)
- Bretford Mfg., Inc. v. Smith Sys. Mfg. Corp., 419 F.3d 576 (7th Cir. 2005) (discussion of passing off and consumer focus of Lanham Act)
- Monolith Portland Midwest Co. v. Kaiser Aluminum & Chem. Corp., 407 F.2d 288 (9th Cir. 1969) (contrast of property-based vs. relationship-based limitations approaches for trade secrets)