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Dixon hit headlines after posting footage of English rugby captain Mike Tindall - husband of the Queen's granddaughter Zara Phillips - cavorting with a former girlfriend at a Queenstown bar on YouTube.
The stunt landed him a sentence of community detention and community service, after he was found guilty by an Invercargill District Court jury of dishonestly accessing a computer at the Base/Altitude bar, and obtaining CCTV footage of Tindall.
Dixon was working as contracted security at the time of the Rugby World Cup.
The sentence, which includes four months' community detention and 300 hours community service, was handed down in August last year.
At a hearing in the Court of Appeal in Wellington today, Dixon's lawyer, David More, argued the conviction was incorrect because the digital footage featuring Tindall copied by his client from the bar's computer was not property.
"He didn't deprive Base Queenstown [bar] of anything, he simply created another copy of what they already had.
"It's an electronic work."
According to the Crimes Act, the "electronic work"copied by Mr Dixon does not fall into the definition of what property is.
The presiding justices - Christine French, Rhys Harrison, John Wild - questioned Mr More at length about his definition of property, and how it related to electronic data.
Mr More also argued Dixon's sentence was excessive.
His "intention to make money out of the footage would not have been unlawful had the footage been lawfully obtained," he said.
At Dixon's sentencing in the district court in August, Jude Kevin Phillips said he had taken the footage intending to sell it to a British newspaper, and when no-one would pay him or co-operate with him, he posted it on YouTube, displaying a "holier than thou"attitude.
Dixon had defended his actions during his trial by telling the jury he wanted to "save the princess from being tortured".
Mr More also referred to evidence from the trial showing Base/Altitude bar had profited from the ordeal.
A fine would have been a more appropriate sentence, he said.
Despite that, Justice Wild said he considered Dixon's actions "a pretty gross breach of trust"of his employer, his employer's client and possibly the bar's customers as well.
The Crown was also due to present its case this morning.
Tindall and Ms Phillips had their first bay, daughter Mia, last month.
Crown lawyer Stephanie Edwards said a "common sense proposition" was at the heart of the Crown case.
"The definition [of property] doesn't require it to be decided whether something is tangible or intangible, it is simply a raw definition which covers all forms of property, whether they can be strictly categorised as one or the other."
It was also wrong to "distinguish between two forms of the same thing" as Dixon wanted the court to do in his case, she said.
Ms Edwards also said the security company Dixon was employed by had their contract terminated by Base/Altitude bar after the events came to light.
- By Teuila Fuatai of APNZ