ARTICLE
29 November 2023

Generics Beat The Tax Man

OM
Oblon, McClelland, Maier & Neustadt, L.L.P

Contributor

Oblon is among the largest US law firms that exclusively practice IP law. Businesses worldwide depend on Oblon to establish, protect and leverage their IP assets. Our team of 100+ legal professionals includes some of the country’s most respected practitioners. Most attorneys hold advanced degrees in engineering, physics, chemistry, biotechnology and other scientific disciplines. Oblon is headquartered within steps of the USPTO office in Alexandria, Virginia. 
Recently Mylan in Mylan, Inc. v. Comm'r of Internal Revenue, 76 F4th 230 (3rd Cir. 2023), beat the tax man.
United States Food, Drugs, Healthcare, Life Sciences

Recently Mylan in Mylan, Inc. v. Comm'r of Internal Revenue, 76 F4th 230 (3rd Cir. 2023), beat the tax man. Mylan tried to deduct its ANDA litigation expenses as ordinary and necessary business expenses which are an immediate deduction, while the Internal Revenue Service (IRS) claimed the expenses should be capitalized which is not as valuable.The IRS asserted that the expenses should be capitalized, under 26 U.S.C. § 263 and the associated regulations, similar to money paid to acquire approvals from the Food and Drug Administration ("FDA"). Mylan at 243. The Court rejected the IRS' argument observing "ultimate FDA approval is never decided by the outcome of patent litigation under [35 U.S.C.] §271(e)(2), even if it is delayed by such litigation."Mylan at 244. The Court concluded "it makes no difference in deciding the question of deductibility whether the patent litigation expenses are incurred by the patentee or the alleged infringer. Nor does it matter that the deductibility question arises in the context of an ANDA suit." Mylan at 239-40.

This decision means that a portion of a generic company's litigation expenses will be subsidized by the taxpayers. The ruling may also apply to the fees and expenses incurred in preparing the required paragraph IV notices.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More