PepsiCo has registered its PEPSI trademarks in the U.S. Patent and Trademark Office. PEPSI products are bottled and distributed in the United States by PepsiCo and by authorized bottlers pursuant to Exclusive Bottling Appointment agreements, which authorize local bottlers to bottle and distribute PEPSI products in their respective territories. Similarly, PepsiCo has appointed local bottlers to bottle and distribute PEPSI products in Mexico within particular territories.

Pacific Produce, Ltd., has been engaged in the sale and distribution within the United States and Nevada of PEPSI products that were manufactured and bottled in Mexico and intended for sale in Mexico (?oMexican product??). The Mexican product sold by Pacific Products in the United States has certain material differences from domestic PEPSI products sold by PepsiCo: (1) it contains inferior paper labels that improperly report nutritional information; (2) it does not comply with the labeling standards followed by PepsiCo in the United States; (3) it is sold in channels of trade different from PepsiCo’s authorized distribution channels without ?odrink by?? notice dates on the Mexican product and monitoring on the Mexican product for proper shipment and storage conditions; and (4) it conflicts with the bottle return policies of PepsiCo. The Mexican product with its ?oMarca Reg?? and Spanish language bottle caps is well received by consumers in Pacific Produce distribution channels. Classify the goods being sold by Pacific Produce. State the applicable law governing a dispute between PepsiCo and Pacific Produce. How would you decide this case? [PepsiCo, Inc. v Pacific Produce, Ltd., 2001 US Dist LEXIS 12085]