A NEW Zealand High Court ruling that the armed police raid on piracy accused Kim Dotcom's Auckland mansion was illegal is a major blow to US authorities trying to extradite him, his United States lawyer says.

Justice Helen Winkelmann ruled the search warrants were too broad and police exceeded their powers in seizing what they did.

She also said it was unlawful for copies of Dotcom's computer files to be taken by US authorities and New Zealand police should return copies to 38-year-old Dotcom.

FBI agents, who had sought help from New Zealand police, seized a massive 150 terabytes of data.

The US says German-born Dotcom's MegaUpload website has cost Hollywood studios and other music, software and television copyright owners $NZ500 million ($A395 million) by facilitating internet piracy on a massive scale.

They are trying to extradite him and three others to the US to face racketeering, copyright and money laundering charges. Dotcom faces up to 20 years in prison if convicted.

Dotcom's US-based lawyer, Ira Rothken, told Radio New Zealand on Friday that the ruling is an embarrassment, especially as US authorities have called the case the largest in copyright history.

"One would think, with such a large case, that they would have a higher standard of care in how they conducted themselves," he said.

"In terms of egregious behaviour, this is at the high end of the scale of egregious, wrongful intrusion on privacy."

Mr Rothken says the ruling supported the view that New Zealand police were acting on the beck and call of the FBI.

MegaUpload's lawyers are expected to appear in a Virginia federal court on Friday (US time) to argue that the charges should be tossed out.

Dotcom's next court date in New Zealand is next Wednesday in the High Court at Auckland.