Emu Australia and Deckers Outdoor have reached a settlement in their long-running battle over the use of the word 'Ugg'.

Deckers filed a lawsuit in December last year claiming that Emu Australia was infringing its trademark through the use of the Ugg name.

Emu counter-sued saying that Deckers had obtained its trademark following a "false statement to the US Trademark office". Emu claimed that Ugg is a generic word in Australia and that there are over 70 registered trademarks in Australia and New Zealand that use the word.

The two companies now say they have reached a settlement. While the terms of the agreement are confidential, Emu Australia said it will result in a complete dismissal of each party's claims against the other.