Millions of dollars a pharmaceutical inventor received under a technology license agreement should be treated as ordinary income, rather than capital gains, for tax purposes, a split federal appeals panel has ruled.

A divided three-judge panel of the U.S. Court of Appeals for the Third Circuit ruled Monday that Dr. Spiridon Spireas, who developed a “liquisolid” application of a successful blood pressure drug, could not claim the more favorable tax treatment because the licensing agreement at issue did not include a transfer of all property rights. The decision affirmed a ruling of the Tax Court that determined the $40 million Spireas received under the agreement was not eligible for capital gains treatment.