Search warrants used when 70 police raided the New Zealand mansion of the suspected kingpin of an internet copyright theft ring were illegal, a court has ruled.

German national Kim Dotcom, also known as Kim Schmitz, was one of four men arrested in January as part of an investigation, led by the FBI, into his Megaupload.com website.

Prosecutors say Dotcom was the ringleader of a group which had netted $175 million since 2005 by copying and distributing music, movies and other copyrighted content without authorisation.

Dotcom's lawyers say the company simply offered online storage.

New Zealand high court judge Justice Helen Winkelmann found the warrants used in the seizure of property from Dotcom's mansion near Auckland were illegal.

Justice Winkelmann found the FBI's moves to copy data from Dotcom's computer and take it offshore were also unlawful.

"The warrants did not adequately describe the offences to which they related," she said in her ruling.

"Indeed they fell well short of that. They were general warrants, and as such, are invalid."

Mr Dotcom welcomed the judge's ruling.

"People understand that a service provider like Megaupload should not be liable for actions of their users, for third parties, that's just wrong," he said.

In response, New Zealand's police, in a statement, said they were considering the judgment and were in discussions with crown lawyers "to determine what further action might be required".

Police said no further comment would be made until that process was complete.

Dotcom is on bail in New Zealand.

US authorities are seeking to extradite him on charges of copyright theft and money laundering.

Officers cut Dotcom out of a safe room he had barricaded himself in within the sprawling mansion.

Millions of dollars in assets were seized or frozen including almost 20 luxury vehicles, dozens of computers and art works.

Reuters