Gilead Sciences Secures Landmark California Supreme Court Victory That Eliminates Nearly 23,000 "Duty to Innovate" Cases, Earning American Lawyer Litigators of the Week Top Honors

Read American Lawyer's Litigators of the Week story about this case.

On August 3^rd, the California Supreme Court ruled in favor of Gilead Sciences, Inc. in a historic product liability decision that held that a drug manufacturer does not owe a duty of care to users of a nondefective drug when making decisions about whether and when to develop and commercialize an alternative drug.

The ruling eliminates nearly 23,000 consolidated cases against Gilead and rejects plaintiffs' first-of-its-kind "duty to innovate" theory of liability.

The Wall Street Journal Editorial Board wrote about this case three times, arguing in 2024 that the California Court of Appeal’s decision approving of plaintiffs' theory would have created “a disincentive to innovate”.

In this Q&A, Josh Rosenkranz and Andrew Silverman, who led the Orrick team, discuss the landmark win with AmLaw and the high stakes involved in fighting back against plaintiffs’ unprecedented attempt to broaden product liability law. “This would be the only duty in the history of tort law that arises because the manufacturer developed a different product that might be safer for some people,” said Josh. “The conventional approach in an appeal is to start with the law and sneak in some policy. But precisely because the California Supreme Court is comfortable breaking with the past and forging its own path in tort law based on its own evolving policy assessment, we decided to defy that conventional wisdom and start with policy.”

“It took a lot of guts for Gilead to defy some of the conventional wisdom to fight against a duty that would so severely hamper innovation. But the Gilead legal team never wavered in pursuing what they believed to be the right result against all obstacles," Josh added. “What was at stake was nothing less than the innovator’s model of building on and improving existing medicines as well as developing breakthrough new treatments.”

THE CASE

• Plaintiffs — roughly 23,000 in consolidated cases in California state court — alleged that Gilead was negligent not because its HIV drug tenofovir disoproxil fumarate (TDF) was defective, but because Gilead supposedly delayed unreasonably in bringing to market another HIV drug it had invented with the active ingredient tenofovir alafenamide fumarate (TAF), which presented fewer side effects to the kidneys and bones.
• Plaintiffs did not contend that TDF was defective or that Gilead should have withdrawn it from the market, and conceded that the side effects were adequately disclosed.
• The case had been litigated since 2018, through summary judgment and the intermediate appellate court, before Gilead sought review from the California Supreme Court.

THE DECISION

• The California Supreme Court rejected plaintiffs' “duty to innovate” theory, holding that a drug manufacturer has no duty of care when deciding whether and when to develop and commercialize an allegedly safer alternative to a nondefective drug.
• The court warned that plaintiffs' theory "lacks a clear limiting principle" and risks "inviting fact finders to second-guess complex resource-allocation decisions."
• The court concluded: "What today's decision declines to do is recognize, for the first time anywhere, sweeping liability for injuries caused by a concededly nondefective drug because the manufacturer allegedly failed to make a different drug available sooner. Imposing such liability would create substantial burdens and would risk adverse consequences for pharmaceutical innovation, public health, and patient safety."

THE IMPACT

• Had the “duty to innovate” theory been adopted, instead of having to prove that a product was defective, plaintiffs would need only to convince a fact finder that the manufacturer acted unreasonably in its development and commercialization decisions of other product — opening the door to liability for existing products that are useful and reasonably safe.
• Manufacturers across every industry could have faced exposure for the "path not taken."
• More than 70 amici filed briefs, including not just companies in pharma, life sciences and medical device sectors, but also market leaders in the auto, consumer device, manufacturing, tech and retail industries – from Pfizer and Lilly, Biogen and Genentech, to General Motors, Toyota, J&J, Dow Chemical and DuPont – as well as the U.S. and California Chambers of Commerce, National Association of Manufacturers, civics organizations, public health organizations, HIV scholars and patient advocates, and legal scholars.

“Having the support of so many amici—in particular, a community of patient advocates and healthcare professionals—allowed us to lean into the policy arguments that ultimately carried the day,” Andrew told AmLaw. “Though we were fully able to brief those issues, third parties with no pecuniary interest in the outcome of the case were able to do so even more powerfully.”

THE TEAM

The Orrick team is led by Josh Rosenkranz and Andrew Silverman with support from Naomi Scotten, Emily Villano, Lisa Bixby, and Anne Savin.