Six years ago, the Motion Picture Association of America (MPAA) sued a Chinese company over film-piracy issues.

But last week, the movie-industry group found itself cutting a deal with that same company. The file-sharing firm Shenzhen Xunlei, has entered into a content-protection agreement with the MPAA, under which the firm will actively protect copyrighted materials such as TV shows and films.

Sporting an estimated 142 million users, the company makes the most world’s most popular client that relies on the BitTorrent file-sharing protocol, according to TorrentFreak, a news outlet focused on copyright and file-sharing issues.

“The online video sector in China is moving purposefully toward an environment that will help sustain a viable, long-term online video business, ensure the creative work of rights holders is sufficiently protected, and provide audiences with a quality, legitimate viewing experience,” said Steven Fabrizio, MPAA’s senior executive vice president and global general counsel, in a statement [PDF].

The association has had a shaky relationship with Xunlei. MPAA’s 2008 lawsuit cast a pall over the company’s stock market ambitions by highlighting its ties to piracy. Xunlei backed out of a 2011 initial public offering on the Nasdaq, only to refile late last month.

TorrentFreak suggests that the MPAA deal is part of an effort by the company to clean up its image but that red flags continued to linger, as Xunlei admitted it does not adhere to basic legal requirements that firms in the United States commonly follow.

“We do not currently satisfy all of the statutory requirements of any [Digital Millennium Copyright Act] safe harbor. If we are ever held to be subject to United States copyright law, that could increase our risk of direct or indirect copyright liability for our resource discovery, acceleration, or other services,” the company wrote in its F-1 filing with the Securities and Exchange Commission.

A Growth Market

The deal with Xunlei comes at a time when the Chinese box office is surging. China’s film industry is second only to the United States’.

Earlier this year, in its Theatrical Market Statistics Report, MPAA reported [PDF] that China saw a 27 percent increase in its box-office tallies in 2013, racking up $3.6 billion. By comparison, the U.S. and Canada drew $10.9 billion in sales in the same period.

That growth is significant. According to Deadline, China had $2 billion in box-office sales in 2011 and and $2.7 billion in 2012, jumping ahead of Japan to become the world’s second-largest film market.

“China is building 10 screens a day,” MPAA CEO Chris Dodd told the publication last year. “There’s a voracious appetite for product and our films have done well.”

Dodd highlighted China’s impact on the film industry by speaking at the Beijing International Film Festival in April.

(iStock/Thinkstock)