Choice "C" is correct. Litigation costs can only be capitalized as a part of the patent asset account if they result in a successful patent defense so that the patent can be retained and continue to provide benefit.
Choice "a" is incorrect. Litigation costs would be expensed immediately if the outcome was unfavorable since the patent would be lost and would no longer be able to provide benefit to the company.
Choice "b" is incorrect. Litigation costs are capitalized if the litigation results in a successful patent defense.
Choice "d" is incorrect. The issue of whether the patent was developed internally or whether it was purchased is irrelevant when it comes to determining what to do with litigation costs. The real key and determining factor is whether the litigation is successful or not.