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The origins of the ugg boot style and the term "ugg" are disputed, with both Australia and New Zealand claiming to have invented the footwear style. Sheepskin boots were known in rural Australia during the 1920s, but exactly when commercial manufacturing began is unclear. They were reportedly being manufactured in 1933 by Blue Mountains Ugg Boots of New South Wales. Frank Mortel of Mortels Sheepskin Factory has stated that he began manufacturing the boots in the late 1950s, and named his company's sheepskin boots "ugg boots" in 1958 after his wife commented that the first pair he made were "ugly."
Lifelong surfer Shane Stedman of Australia has stated in interviews that he invented the ugg boot in 1971. Stedman registered the trademark "UGH-BOOTS" in Australia in 1971, and in 1982 registered a logo containing a stylised Sun with the words "UGG AUSTRALIA". Perth sheepskin boot manufacturers Bruce and Bronwyn McDougall of Uggs-N-Rugs have manufactured the boots since the late 1970s.
The terms ugg boots, ugh boots and ug boots are believed to have been used to describe sheepskin boots in Australia and New Zealand since the late 1950s. Some accounts have suggested that the term grew out of earlier variations, such as the "fug boots" worn by pilots during World War I. The 1970s saw the emergence of advertising using the terms, and the Macquarie Dictionary of the Australian language first included a definition for "ugg boot" as a generic term for sheepskin boots in its 1981 edition. (After Stedman complained to the editors of Macquarie, a trademark notation was added to subsequent editions indicating that "UGH" was a trade mark).
In the 1960s, ugg boots became a popular option for competitive surfers, who used the boots to keep their feet warm after exiting from the surf. After movie theaters in Sydney banned ugg boots and ripped jeans, the footwear became somewhat popular in the youth market as a sign of rebellion. Sheepskin footwear accounts for around 10% of footwear production in Australia.