There's no business like shoe business

This year's must-have fashion footwear has kick-started an Uggly battle between an Australian cottage industry and a giant US corporation. Kathy Marks reports on a fight to the last

Tony Mortel's hair is standing on end, an effect created by equal doses of gel and outrage. "Who do they think they are?" he fumes. "Telling us what we can and can't call our product, trying to stop us from making a living. Well, they can stick their demands where the sun doesn't shine."

Tony comes from seven generations of boot-makers and, for the past 45 years his family has been making Uggs, the once dowdy sheepskin boots now worn by the likes of Gwyneth Paltrow and Kate Moss. Their factory in Australia's Hunter Valley turns out 16,000 pairs a year. At least it used to, before a large US company across the Pacific Ocean began taking an unwelcome interest in their affairs.

Staff at Mortels Sheepskin Factory had just returned from their Christmas break when a letter arrived from the Melbourne solicitors of Deckers Outdoor Corporation, a California-based conglomerate. The letter, which was sent to 19 other Australian firms, informed them that Deckers owned all rights to the name Ugg and instructed them to stop using it or face litigation.

"I just laughed," says Tony. "I thought they were crazy. I threw it in the bin." But it was no laughing matter. Soon afterwards, at the instigation of Deckers, Mortels was ejected from eBay, the internet auction site where it had been selling Uggs to American consumers. Last Wednesday, it was ordered by Icann, the internet regulatory body, to stop using "Ugg" in its domain name.

The two dozen traders affected by such legal moves are reeling from shock and disbelief. For decades, they have been part of a thriving cottage industry founded on an Australian product that - according to folklore - dates back to the 1920s, when shearers used to wrap sheepskin around their feet to keep warm in the sheds.

Uggs, they argue, have always been called Uggs, originally an abbreviation of Ugly. No one bothered with trademarks because Ugg was a generic term. Everyone knew it meant a comfortable, flat-heeled sheepskin boot, although - until the current fashion craze - few people admitted to owning a pair. Brian Iverson, owner of Blue Mountains Ugg Boots, says of Deckers' demands: "It's like saying you can't call a car a car."

The problem is: someone did bother with trademarks. In 1971 a local surf champion, Shane Steadman, decided to capitalise on the growing popularity of Uggs among Australian - and visiting US - surfers, who were starting to recognise the appeal of a snug boot when they emerged shivering from the ocean. He began selling Uggs and registered the name.

Steadman was not the only Australian wave-rider with a sharp eye for a business opportunity. In 1979, so the story goes, Brian Smith arrived in New York with a few pairs of Uggs in his backpack. He set up a company, Ugg Holdings Inc, registered the Ugg trademark in 25 countries and in 1995 sold out to Deckers.

For a long time, not a peep was heard from the new American owners of the iconic Australian boot. The company sent out a flurry of warning letters five years ago, but did not follow them up. According to Middletons, its Melbourne lawyers, it was only when Australian manufacturers began selling Uggs on the internet to meet soaring overseas demand that Deckers felt obliged to crack down.

Not surprisingly, the Australian firms - most of them small family outfits with a handful of employees - are unimpressed with the Santa Barbara-based company's arguments. They say Brian Smith was awarded the trademarks in error and are planning court action to have them rescinded, at least in Australia.

Their only other choice is to give up and go under - for without the name Ugg, they say, they cannot sell their boots. "People around the world know them as Ugg boots," says Tony Mortel. My family has been marketing them as Uggs for 45 years. For Deckers to say that we should give it all up, without compensation, is borderline monopolisation."

The Australian traders have united under the banner of the Ugg Boot Footwear Association and set up a fighting fund to finance the forthcoming legal battle. Those waiting in limbo include Westhaven Industries, a disabled services charity that employs 65 people at its factory in Dubbo, a small town in New South Wales. Ugg boots are the charity's most profitable product and, without them, the business would not survive.

Employees include Dougie Stewart, who has been making Ugg boots at Westhaven for 30 years and travels more than 60 miles each day to work. "He's a brilliant worker and he loves what he does," says Gordon Tindall, the charity's general manager. "If we had to close as a consequence of this, it would be devastating for our workers. This is all they know, and they won't get a similar job anywhere else."

Gordon insists that Ugg is "as generic as meat pie or tomato sauce", and says he has every right to use it. "If it waddles like a duck and quacks like a duck, then it is a duck and not a chook [chicken] in my book," he says, adapting an oft-used Australian phrase. "It's like Ford Motor Company claiming that they own the word 'sedan'."

When Westhaven received the letter from Middletons in the New Year, he says, "my first thought was 'bugger, we'll have to comply'. Then I thought 'why should I?' Our industry has agreed that we won't be bullied by these guys. We'll carry on doing what we've always done and let Deckers take some of us on".

At Mortels, situated on a light industrial estate outside Maitland, about 100 miles north of Sydney, the latest Uggs - in this season's colours of pale blue, pale pink, lavender and denim - are arrayed in a shop emblazoned with "Ugg Boots And Slippers'' in huge lettering. Tony Mortel has been told to remove the word Ugg from the window. He has not complied.

Inside the small factory, machinists are discussing conspiracy theories about Princess Diana's death and periodically checking the temperature; if it rises above 40 degrees Centigrade, they can go home early. It hovers, irritatingly, at 39.9 degrees. Beneath the laughter and good-natured banter, there is an edge of anxiety. "If we can't make Uggs anymore, I'll have to find another line of work," says Marewa Lamb, stitching a pair of tan boots.

She and the others operate a mini-production line. Tony (the "clicker") cuts out the pieces of tanned and dyed skin and passes them to Marewa, known as Ma, who sews on the heel support. Next in line is Wanda Herickwitz, who attaches the inner sole, and Andrew Cook stitches the whole thing together. Angela Daley binds the boot and adds the finishing details. Damien Lambert glues on the sole.

Cheerful, down-to-earth people, they have one word to describe the notion that they should stop calling an Ugg an Ugg. "Stupid," says Angela. "Everyone knows them as Ugg boots. If you changed the name, people wouldn't know what you were talking about."

Their views are shared by Tony's father, Frank - now 71 and retired, but furious about the turn of events. Frank emigrated from Holland in 1958, bringing a few sewing machines, and set up a tiny sheepskin factory. Descended from a long line of orthopaedic boot makers, he made his first pair of fur-lined slippers for his wife, Rita, who wanted something to keep her feet warm. He then started making the slippers and boots commercially.

"We called them Uggs from the start," he says. "Although I recall other names such as 'woolly hoppers'. I'm sure this American company is just trying to frighten people off."

If that is true, the tactics have had the desired effect. Some manufacturers have excised the offending word from their trading names or websites. Westhaven no longer uses the word Ugg in its catalogues and price lists. Others, such as Uggs-N-Rugs in Western Australia, are standing firm, but with trepidation. Brian Iverson, whose family has made Uggs for three generations, is resisting. "Uggs are as Australian as the Harbour Bridge," he says.

Tony Watson, a partner with Middletons, says the portrayal of Deckers as "some big bad aggressive American company that likes squashing small businesses" is unfounded. "We don't want litigation, but people have to understand the bigger picture," he says. It was Deckers, he says, that transformed Uggs into a high-fashion item, spending $7m on marketing over the past decade and sending boots to personalities such as Oprah Winfrey. Now others are reaping the benefits.

"My client has developed a marketplace and is trying to protect it," he says. "They are certainly not going to throw their hands up and say, 'We've invested all this money, we've built up the brand and registered the trademark, now we're just going to walk away.' "

Among Deckers' competitors, those who sell over the internet are most vulnerable. Without "Ugg" in their domain, or trading names, they will not be located by consumers searching the web. All searches will lead to Ugg Australia, the brand name under which Deckers sells the boots around the world.

The company appears determined to protect its dominant position in the US as well as among European consumers. Yet Australian traders say they have been exporting to the US and elsewhere for decades. "Between us, we must have spent far more than Deckers on marketing," says Tony Mortel.

The irony is that while Deckers is trying to prevent Australian traders from calling an Australian product a name by which it has always been known in Australia, it brazenly exploits Ugg's Australian origins through its choice of brand name. Claims that it uses American (rather than Australian) sheepskins are flatly denied by Tony Watson, although he admits that, as of a few months ago, "some" Uggs are manufactured in China, with the rest produced in Australia and New Zealand. He compares "Ugg" with "Biro" and "Hoover" which, although commonly used generically, are protected by trademark.

A false comparison, say Tony Mortel. In those cases, a product was developed and marketed and a name invented and trademarked. In the case of Ugg, all the hard work was put in by others, then Deckers came along and bought the name. "We've put our heart and soul into this product," he says. "It's our livelihood, our heritage."

Tony Watson does not have an answer to this point. "We'll no doubt get to the bottom of it if the case comes to court," he says. He adds that Australian traders should accept reality and develop another brand. "How about Surfers' Sheepskin Boots?" he suggests.

Tony Mortel refuses to acknowledge the possibility of defeat. "We're going to carry on fighting," he says. "We know we're in the right, and we know we're going to win. It's just a matter of time."