Australian band Men At Work have lost an early battle in a lawsuit over their popular 1980s-era song Down Under.

An Australian Federal Court judge ruled on Thursday that publisher Larrikin Music owns the copyright to the children's tune Kookaburra Sits in the Old Gum Tree — for which the company claims Men At Work stole the melody for their 1983 hit.

Larrikin is suing Men At Work as well as its record label, EMI, for breach of contract and compensation from royalties for the chart-topping song — still often heard in bars and at events, especially across Australia.

The music publisher claims that Down Under's flute riff was copied from sections of the children's campfire tune that Marion Sinclair, a teacher, wrote in 1934.

Sinclair, who died in 1988, wrote the song for a songwriting competition held by the Girl Guides Association of Victoria. Larrikin bought the rights to the song in 1990, at an auction.

Lawyers for Men at Work had unsuccessfully argued that the rights belonged to the Girl Guides.

The main case, regarding royalties for the song, will be heard in court later this year.