A New Zealand appeals court ruled that the search warrant used to raid the house of Megaupload founder and CEO Kim Dotcom on US online piracy allegations was legal.
Overturning an earlier High Court ruling that the search warrants were illegal, the latest ruling comes as a blow to the owner of the file sharing service, who is fighting extradition to the US.
The ruling would also benefit US prosecutors alleging that the Megaupload website costs film studios and record firms over $500m and generated over $175m in illegal earnings by allowing users to store and share copyrighted content including movies and TV shows.
The appeal court judges said in a statement that a reasonable reader in the position of the recipients of the search warrants would have understood what they related to.
"There was no disconnect between what there were reasonable grounds to believe might be at the properties and what the warrant authorised the police to take," judges added.
The appeals court also supported an earlier decision that prosecutors had not been authorised to deliver clones of detained electronic evidence to the US.