Appellant James Tinnell developed a liquid solution to treat lesions caused by the herpes virus. He applied for a patent on the treatment and acquired a defunct corporation, now named Zila, as a vehicle for marketing and selling the product, now called Zilactin. Tinnell subsequently entered an agreement with Zila that assigned all rights in his invention to the company in return for royalty payments and company stock. The royalty payments provided for in this contract are the subject of the present dispute.
The contract at issue is unambiguous as to the duration of the royalties, and the parties agree on their intent at the time it was formed. All the evidence is thus in accord with a single interpretation — that Tinnell would relinquish all rights to Zilactin, patent or otherwise, and, in return, receive in perpetuity a five percent royalty on Zila’s sales of the invention. The difficulty in this case arises because Zila asserts, and the district court agreed, that the doctrine announced in Brulotte v. Thys, 379 U.S. 29 (1964), displaces, because of federal patent policy, the parties’ intent and renders the royalty obligation unenforceable, either entirely or upon the expiration of the first patent that issued on Tinnell’s invention. We confront, consequently, not simple questions of contract law but rather issues concerning the impact and bounds of Brulotte, in the context of an otherwise unremarkable case.
