California Court Decision Permits Lawsuits Against Companies for Failing to Produce Goods

California consumers now have the legal right to sue companies for not finishing products that are still in development. In a recent ruling, a California appeals court determined that businesses in the state can be held accountable for their failure to deliver completed products.

A California court faced a class action suit involving 24,000 AIDS patients against Gilead Sciences. The biotech giant was criticized for not introducing a new HIV treatment sooner, which was expected to be a safer alternative to the existing medications.

Gilead did not release a product that failed to meet its promises. They did not introduce something to the market that led to unforeseen harmful side effects. Gilead simply did not complete the research, testing, and approval process for the new drug quickly enough.

Gilead has a long history of successfully treating HIV. The company developed a groundbreaking drug called tenofovir disoproxil fumarate (TDF) in 1991, which was one of the first effective medications for HIV. After obtaining FDA approval in 2001, Gilead was able to market this life-saving drug to help patients with the virus.

Attorneys representing the plaintiffs claimed that Gilead was aware of the potential side effects of skeletal or kidney damage caused by TDF. The 24,000 individuals involved in the lawsuit stated that they experienced these or other injuries as a result of using the medication.


In 2001, Gilead was also developing another proprietary HIV drug called tenofovir alafenamide fumarate (TAF). However, the company decided to halt its research on TAF in 2004, claiming that TAF was essentially the same as TDF. Nevertheless, the lawsuit alleged that Gilead’s research team and senior management were aware that the newer medication allowed for a lower dose and had fewer negative side effects. Despite this knowledge, they intentionally withheld the information in order to continue profiting from the existing supply of TDF already available in the market.

Gilead restarted the development of TAF in 2011 and received FDA approval for marketing in 2015, just before the expiration of its patent on TDF, which would have allowed other companies to market generic versions of the drug. In a legal filing, Gilead admitted that there was significant evidence indicating that TAF had less of an impact on kidneys and bones compared to TDF.

At the time of writing, no leaked internal communications or credible testimonies from former employees have emerged to substantiate this accusation. Instead, there is only a timeline that presents coincidence as condemnation. However, it is worth noting that Gilead initiated research on the new drug four years before TDF’s patent expired, as objectively inferred without any undue influence of agenda.

Gilead was accused of negligence in a lawsuit for allegedly withholding a safer drug to prioritize profits. The company defended itself by stating that it couldn’t be considered negligent for selling medication that effectively treated the intended disease. However, the appeals court ruled against Gilead.

Associate Justice Jeremy Goldman, on behalf of a three-judge panel, has stated that the responsibility of a manufacturer to exercise reasonable care can extend beyond simply not marketing a defective product.

According to the appellate court, its ruling does not impose an obligation to constantly innovate or strive for superior products. However, if a business initiates research on a superior alternative, it may be legally bound to introduce it to the market, regardless of the associated costs. This means that companies operating in California would need to consider whether it would be more financially burdensome to develop a new product or face potential lawsuits from their customers.

According to Deb Telman, the general counsel of the company, this ruling marks a significant milestone in the state’s appellate courts. It is the first time they have held a manufacturer accountable for a product that is not defective.

Telman emphasized that if the ruling is upheld, it will have far-reaching and adverse effects on various industries, stifling innovation and hindering the advancement of new and existing products.

Law firms in California now have a new opportunity to generate revenue thanks to a recent ruling. This development sets them apart as one of the few profitable businesses in the state.

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