Case: Patents/Taxation (3d Cir.)

The Third Circuit affirmed the decision of the U.S. Tax Court allowing Mylan Inc. to deduct as ordinary and necessary business expenses the legal fees it incurred in defending itself against patent infringement lawsuits brought under the Hatch-Waxman Act. The appeals court rejected the commissioner’s assertion that the fees should be understood as a cost of acquiring approval from the U.S. FDA to market Mylan’s generic drugs and should therefore be treated as capital expenditures, because the litigation is distinct from the FDA’s scientific review process and not actually facilitative of generic drug approval.