A settlement has been reached between supermarket giant Woolworths and local family organic food business Honest to Goodness over the supermarket's use of the phrase in its recent marketing campaign featuring celebrity chef Margaret Fulton.

In a public statement, the supermarket said the settlement was mutually acceptable.

"In regard to the recent trade mark proceedings, the parties have reached a settlement on mutually acceptable, confidential terms and on a without admissions basis," the retailer said. "Woolworths' Margaret Fulton Honest to Goodness Family Meals campaign is scheduled to end on 31 December 2011."

The small organics company has been trading under the brand ‘Honest to Goodness' since 2002.

"We have been fighting a nightmare legal battle that we never thought we would have to," said Honest to Goodness' founder and managing director, Matt Ward. "Registering the trademark ‘Honest to Goodness' and trading under this brand for nine years should have been enough to protect our brand. Instead, we have been forced to spend hundreds of thousands of dollars in a legal battle to protect it," he said.

Ward added that the campaign by Woolworths had "confused and alienated" customers, diluted their brand and cost the company time and money.

"What is unique about Honest to Goodness is our ethics, ideals and principles behind the products we choose to sell and the way we do business, so seeing Honest to Goodness plastered all over Woolworths was devastating for us and our customers and we were left with little choice," said Ward.

"Woolworth's use of Honest to Goodness was affecting people's impression of our brand and confusing consumers. We've had loyal customers contact us feeling aggrieved we've sold our business to Woolworths and saying they won't be buying our products. If this can happen to us, then it can happen to other well meaning good businesses trying to do the right thing."

Ward said that the business had a totally different approach to food to that of the supermarket giant.

"We now have to reassure those we do business with that we're in no way associated with Woolworths. We sell exclusively natural, organic food that is healthy and nutritious for the family. We're about paddock to plate distribution and support small growers all over Australia. We're about ethical production and food which is honestly produced and fairly paid for," Ward said.

"This legal process has been very consuming and as an operator of a small business you simply can't afford to be distracted with a lengthy dispute and lose focus on everyday business. It is a relief now to be able to put all our energy back into what we are passionate about and that is the food," he added.