The Court of Appeal reversed a lower court ruling that the June 2012 raid was carried out under invalid warrants, Stuff.co.nz reported. The court said deficiencies in the warrants were technical.
But the court said U.S. law enforcement agents did not have the right to seize Dotcom's computers. Dotcom was arrested during the raid on his mansion in Coatesville near Auckland but is now out on bail.
Dotcom, born Kim Schmitz in Germany in 1974, changed his name in 2005 after becoming a millionaire. He has also had legal troubles, including a suspended sentence in Germany in the 1990s, for hacking.
The United States is seeking Dotcom's extradition on charges of copyright violations and piracy. Dotcom has been living in New Zealand since 2010.
Prime Minister John Key said he does not expect extradition soon.
"What the Court of Appeal has found is that the police search warrants were valid," Key said. "The only point I would make is there are going to be a lot of twists and turns in terms of litigation with Mr. Dotcom. These matters are highly likely to be appealed so we'll just leave it at that."
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