MELBOURNE, Australia — An Australian company’s long-shot bid to scrap a U.S. trademark on the word “Ugg” has suffered a crippling blow after an American court threw out the case on appeal, in a loss that could have far-reaching consequences for Australian makers of the sheepskin boots.

It’s the latest step in a five-year, high-stakes legal battle between the brand’s owner in the United States, Deckers Outdoor Corporation, and a company called Australian Leather. They have been wrangling over ownership of the name of a shoe that has been derided as unfashionable and downright ugly but that has still found its way onto the feet of celebrities like Oprah Winfrey and Tom Brady.

The Australian news media called the lawsuit a “David vs. Goliath” battle, and the case hit a nerve for many Australians, who consider the footwear a national, albeit unfashionable, symbol. The case also illustrated how global access to products on the internet could create clashes between local legal systems.

Australian Leather’s owner, Eddie Oygur, said after the court ruling on Friday that he would take the case to the U.S. Supreme Court.

“This is not just about me; it is about Australia taking back ‘ugg,’” Mr. Oygur said. “The trademark should never have been given in the first place to the U.S.”

In Australia, the word is used as a catchall term for sheepskin boots lined with fleece that have been made since the 1930s. They were popularized by surfers in the 1960s. The term isn’t trademarked there, and anyone can sell ugg boots. It was registered as a brand in the United States in the 1980s by the Australian entrepreneur Brian Smith.

Deckers said it had fairly bought the name from Mr. Smith, that it had trademarked “UGG Australia” in the United States in 1995, and that American consumers knew it as a brand name rather than as a generic term. Deckers holds the trademark in more than 130 countries, meaning Australians are largely prevented from selling their boots internationally.

Deckers took Australian Leather to court in 2016, claiming trademark infringement because Mr. Oygur had sold 13 pairs of ugg boots in the United States through his website. Mr. Oygur did not deny the boot sales but argued that Deckers should never have been able to trademark the term “ugg” in the first place.

Credit…Deckers outdoor, via PR Newswire

“We should be able to sell our ugg boots worldwide,” Mr. Oygur said. “It’s generic here, and it’s an Australian product.”

He also argued that uggs used to be generic in the United States, with numerous entrepreneurs selling them across the country before they were trademarked, and that the term warranted similar protection in Australia to the French “Champagne” and Greek “Feta.”

In 2019, the U.S. District Court for the Northern District of Illinois found in favor of Deckers, ruling that although ugg was a generic term in Australia, it had no such meaning in the United States. It also ruled that the term was not subject to the “doctrine of foreign equivalents,” a legal guideline in the United States that says foreign words for categories of items cannot be trademarked, and that Mr. Oygur had willfully infringed on Deckers’s trademark. Mr. Oygur was ordered to pay $450,000.

Mr. Oygur challenged the decision in the United States Court of Appeals for the Federal Circuit. In court documents filed ahead of the appeal, his lawyers argued that the U.S. District Court had used the wrong standards to judge whether something was generic. In its own documents, Deckers countered that the judge had used the right test and cited survey evidence that most U.S. consumers recognize Ugg as a brand.

On Friday, the court handed down its decision. It did not give any reasons.

Tom Garcia, the chief administrative officer of Deckers, said in a statement before the verdict that the company believed there was no merit to the appeal.

“Deckers welcomes fair competition,” he said. “However, this case was about protecting American consumers from being deceived into buying counterfeit product that was being offered for sale and sold online into the U.S.”

Dean Wilkie, a senior lecturer in branding and marketing at the University of Adelaide, said: “In the Australia market, a regular person on the street, if you go up to them and say do you think it’s right that this American brand is stopping people using ‘ugg’ on sheepskin boots, most of us would be outraged because it doesn’t feel right. It doesn’t feel moral.”

On the other hand, he acknowledged, Deckers spent years building up Uggs into a sophisticated lifestyle brand — a far cry from the situation in Australia, where they are relegated to souvenir shop windows, and people use them for grocery store runs and wear them around the house.

“The internet has given us access to a global market. We can distribute products all around the world. But the legal systems aren’t global. They’re within countries,” Dr. Wilkie said.

At its peak, Australian Leather made about 50,000 to 60,000 pairs of boots a year and had a few dozen staff members. Last year, Deckers earned $2 billion in revenue, with three-quarters of that coming from the Ugg brand, according to its 2020 annual report.

The stakes for both companies were high. Before the verdict, Nicole Murdoch, an intellectual property lawyer at Eaglegate Lawyers in Brisbane, Australia, said a legal success for Mr. Oygur would have a “catastrophic effect for Deckers,” costing the company the trademark on which it had built its brand.

Mr. Oygur said before the verdict, “All the ugg boot makers in Australia will turn to imports because of the prices, and Australia will lose what’s been Australian since the 1930s.”

Personally, he had put everything on the line: the business he had run for nearly 40 years and a house he had mortgaged to pay his legal fees. He said he had spent over a million dollars on the case, lost the majority of his staff and seen the legal challenge scare off many of his customers.

“God help me, I’m not going to back down,” he said. “They gave me no choice. Absolutely no choice.”

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