SAN FRANCISCO (Legal Newsline) -- A recent judicial ruling expected to be appealed soon to the California State Supreme Court could have a dramatic impact on future product innovation in the pharmaceutical industry, according to legal and medical experts.

The 1st District Court of Appeals, based in San Francisco, ruled unanimously in favor of Elizabeth Conte, who is suing Wyeth Pharmaceuticals over its anti-heartburn medication Reglan.

This case pushes product liability into uncharted waters because Conte, while she contracted an incurable muscular condition, she did not contract it from taking Reglan, the product produced by the company she is suing.

Conte took a generic brand of the drug produced and marketed by an entirely different company.

"The theory behind the suit was that Wyeth," according to Jeff Emanuel, research fellow for health care policy at the Heartland Institute, "as the original developer and manufacturer, had a responsibility to warn all consumers of generic equivalents of its drugs - not just Wyeth's own customers -- of risks and side effects of its drugs."

Conte's legal team successfully argued that Wyeth had the most knowledge about the safe practices of the drug in any form since it developed and produced the original drug, which makes the company responsible for warning doctors of those risks even in the generic form.

Emanuel said the District Court's ruling is the first time in the nation a court has allowed a civil case to proceed against a product manufacturer by a consumer who didn't take the actual product made by the company being sued.

Wyeth's "common-sense case," according to Emanuel centered around the idea that the suit should be filed against the company "that actually made, packaged and sold the drug."

The final legal stop will be the state Supreme Court as it is filed under a state law. Still, the ultimate outcome of this case could have wide-ranging implications on product innovation, according to legal and medical professionals.

Allowed to stand the liability of any potential product expands far beyond what the manufacturer can tangibly control within its own company.

"The practical result of this is quite simple," Emmanuel wrote, "The astronomically increased risk ... will force businesses to think twice before sinking resources into product innovation. As one business owner said to me during a recent conversation, because of rulings like this, 'it's better to stick to the tried-and-true, and leave innovation to the Chinese and Indians who can respond to plaintiffs lawsuits by saying, oh sure, come and get us.'"

This ruling if upheld will apply only to the state of California.