The U.S. Coast Guard donated the 900-pound lens to the City of Harbor Beach in 1970 under certain conditions. In 1987, the city decided to let Huron City Museums use it, according to the lawsuit.
The government, however, said Harbor Beach and the local Grice Museum had no authority to pass the lens to someone else.
Huron City Museums is a group of restored buildings — a store, a church, an inn and others — between Port Austin and Port Hope at the tip of Michigan's Thumb. The buildings were constructed after a fire in 1881 wiped out Huron City. The buildings typically are open only a few days a week in July and August.
The 16-panel lens, which was in the Pointe Aux Barques lighthouse on Lake Huron until 1969, is now displayed in a former life-saving station.
The Coast Guard estimated the lens' value at $550,000 in 1998.