The entrepreneur has seized on this as a victory. That is understandable. It matches with his long-made claim there was never any criminal copyright violation.
Dotcom now intends to use that finding as a lever to dismantle the case. He told the Herald he intends to start a new court case which centres on the accusations of criminal copyright faced since the raid in January 2012.
When our elite anti-terrorist police stormed the Coatesville mansion to make arrests, the warrant they issued to Dotcom cited exactly the section of the Copyright Act which the court now says in not an extraditable offence.
It's worth considering this in context with what else happened at the time.
There were also issues with the restraining order for Dotcom's assets. It was the first major blunder in a case which would see others.
There were innumerable issues with the search warrant - it didn't go through the right approval channels and contained dodgy intelligence which overstated the risk.
There was also the spying failure where it turned out the Government Communications Security Bureau - partner agency to the National Security Agency - was following a rulebook written on a misunderstanding of its own law.
And so how long was it known that it might not be possible to extradite Dotcom for alleged criminal violation of the Copyright Act?
The court hearings started to feature the word "fraud" some time after the arrest. It was at least six months and possibly a year. Prior to that, all the references were about "criminal copyright".
Just how many errors have there been in the Dotcom case? The only thorough rinse-through of any of the errors seems to the review of the GCSB by then-Cabinet Secretary Rebecca Kitteridge.
The reason it matters is that we're still a few years away from a conclusion to this case.
Dotcom is picking seven years until it is over. It's hard not to have sat through the search warrant hearing, the restraining order hearings and others and to wonder if it could have been faster.
Could the New Zealand government have done its job in a way which shortened the process?
And was it as basic as arresting Dotcom for entirely the wrong thing?
Dotcom's had a benefit to New Zealand in terms of shaking up every government department he has encountered.
For any defendant, ever, who has wondered at the value in challenging the system there is now Dotcom showing how worthwhile it can be.
In some parts of our system, if you shake it then they might just fall down.
Dotcom Timeline
2012
January: Kim Dotcom and three others arrested on charges of criminal copyright violation.
September: Prime Minister John Key says sorry for the GCSB illegally spying on Dotcom and one other.
2013
January: Dotcom and his co-accused launch Mega. Dotcom goes on o make $30m from the business.
December: Dotcom launches Good Times, an album of his electronic dance music.
2014
March: Dotcom starts the Internet Party to challenge the government in the 2014 general election.
May: Dotcom and wife Mona separate, later citing pressures of the extradition case.
September: The Internet Party collaboration with Mana Movement ends with no MPs and 1.34% of the vote.
2015
July: Dotcom slates Mega, of which he has divested shares, and pledges to set up a new business.
December: The District Court rules the Megaupload accused are eligible for extradition.
2016
August: The appeal hearing in the Megaupload case begins at the High Court in Auckland.
2017
February: A decision comes back from the High Court - extradition is a go but not on criminal copyright grounds.
