Iconic Australian rockers Men at Work could be facing a hefty legal bill after a court ruled that they plagiarised part of their worldwide 1980s hit Down Under.

Larrikin Music accused the band of stealing the song's flute riff from the children's song Kookaburra Sits In The Old Gum Tree.

Record companies EMI and Sony BMG disputed the claim but today the Federal Court ruled in Larrikin's favour.

Kookaburra Sits In The Old Gum Tree was written by Melbourne teacher Marion Sinclair for a Girl Guides jamboree in 1934 and has been sung by generations of Australian children ever since.

Larrikin owns the rights to the song and took Sony BMG and EMI to court demanding compensation from Down Under songwriters Colin Hay and Ron Strykert.

Costs are yet to be determined but Larrikin's solicitor Adam Simpson says they could run to 60 percent of the income derived from the song.

"Obviously the more the better, but it depends," he said.

"I mean, anything from what we've claimed, which is between 40 and 60 per cent, and what they suggest, which is considerably less."

John Anderson from EMI was not saying much outside court, except that the company would have to review what he called a complex judgement.

When asked if he expected significant damages to be awarded he gave this brief answer: "Not necessarily."

The judge also ruled that a Qantas advertisement which used a small similar section of the riff was not in breach of copyright laws. EMI said it was pleased with this decision but Mr Simpson was not ruling out further legal action.

"In the Qantas ad there was a smaller part of the song and so the judge felt that wasn't enough to qualify as an infringement of copyright. But we'll be giving that some more thought," he said.

Earlier in the case, Larrikin had to get the Federal Court to recognise its ownership of the copyright.

The Federal Court ruled in July 2009 that Larrikin owned the rights to Kookaburra, which it said it acquired in 1990.

Down Under was a worldwide hit when it was first released in the early 1980s, becoming the unofficial anthem of the Australian team that won the Americas Cup in 1983.

It also featured in the closing ceremony of the 2000 Sydney Olympics.

The song pays tribute to Vegemite sandwiches and a land where "beer does flow and men chunder", and is a jukebox favourite in drinking establishments across the nation.

Music copyright lawyer Stephen Digby said he was surprised by the court's decision.

"I think it could have gone either way but my initial reaction was always that this was going to be a very hard case for Larrikin to win," he said.

"It is certainly an identifiable and discernable piece within the song, but my gut feel was that it was probably not sufficiently substantial in the song as a whole.

"Clearly the judge disagreed with me."

And he says the judgement could clear the way for more cases to come forward.

"I think it could. And that's something that concerns me a little bit. And I look forward to seeing the judgement in full. And I'm hopeful that in that he [the judge] might give us guidance on what he considers to be a substantial part or not."