Generic Drug Maker Can Deduct Costs of Patent Infringement Suits

Legal fees that Actavis Laboratories FL Inc. incurred while defending its generic drug applications from patent infringement lawsuits are tax deductible, the US Court of Appeals for the Federal Circuit said Friday.

A three-judge panel affirmed the conclusion of the US Court of Federal Claims from 2022. Judge Leonard P. Stark wrote that that the lawsuits the generic drug maker defended involving Hatch-Waxman Act patent infringement claims were a “parallel” process to the approval it was seeking from the US Food and Drug Administration, and qualified as deductible “ordinary and necessary business expenses.”

The IRS argued the court costs ...