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Signing a character deal under US law: what §204(a) and E-SIGN mean for a Discord sale

2026-09-06 · OpenStela · general information, not legal advice

A large share of character sales between creators happen in a Discord thread: a price is agreed, money is sent, a folder is shared, everyone moves on. Most of those sales are fine until the day one is not — the buyer relists the character, the seller sees it, and the question becomes what, legally, was transferred. Under United States law the answer is often “less than either side thought”, for reasons that have nothing to do with bad faith and everything to do with a few formalities the Copyright Act still insists on. This post is about those formalities, and about how the platform's contract templates are built around them.

1. A transfer of copyright has to be in writing and signed

Section 204(a) of the Copyright Act says a transfer of copyright ownership “is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed”. An exclusive licence counts as a transfer of ownership under §101, so the rule covers both of the deals the platform supports. A non-exclusive licence does not need a writing; an outright sale or an exclusive grant does.

A Discord message saying “yeah it's yours” may or may not satisfy that. Courts have accepted short writings, but the buyer is the one who has to prove it, years later, from chat logs. The templates remove the argument: both parties state that the signed text is intended to be the §204(a) writing, and the signature is recorded against the SHA-256 of that exact text.

2. Electronic signatures are real signatures

The federal E-SIGN Act and the state Uniform Electronic Transactions Act make an electronic signature as effective as ink, provided the parties agreed to deal electronically and the record can be retained and reproduced. Both templates contain that consent, and the deal record the platform issues — signature timestamps, text fingerprint, transfer event — is the retained record. For European parties the equivalent is Regulation (EU) 910/2014, which the templates also cite. Signing a fingerprint rather than a PDF has one practical advantage: if anyone later produces a “final” version with different wording, its hash will not match the one both parties signed.

3. The author's right to terminate cannot be signed away

Under §203 the author of a work can terminate a transfer or licence during a five-year window beginning 35 years after the grant, and “termination of the grant may be effected notwithstanding any agreement to the contrary”. Nothing in a contract can waive it. Rather than pretend otherwise, the assignment template says so in a clause of its own: the agreement is subject to any right the law makes non-waivable. A contract that purports to override §203 does not gain anything; it only hands the other side an argument that the drafter did not know the statute.

4. Moral rights, in the one place US law has them

The United States has almost no moral rights, with one exception: the Visual Artists Rights Act gives authors of certain works of visual art rights of attribution and integrity, and lets them waive those rights only in a signed writing that names the work and the uses. Whether a digital character qualifies is doubtful, but the cost of covering it is one paragraph, so the templates include an express VARA waiver alongside a “to the extent permitted” waiver for jurisdictions whose moral rights cannot be waived at all — there, the seller covenants not to assert them instead.

5. The face problem: right of publicity

Copyright is federal; the right to control commercial use of a person's likeness is state law — New York Civil Rights Law §§50–51, California Civil Code §3344 and their relatives. If a photoreal character was built on a real person's face, the buyer can own every copyright in the pack and still be unable to use it. The templates handle this as a warranty: the seller represents that the character does not depict an identifiable real person, living or dead, unless a written release is disclosed. It is one of the warranties that, if untrue, lets the buyer rescind within the acceptance window.

6. What the Copyright Office says about AI

The US Copyright Office's position is that material generated by an AI system without sufficient human authorship is not copyrightable, and that a character is protected only to the extent human creative choices delineate it. A character pack is usually mixed: the written specification and the works are human-authored; the reference set may be generated. Rather than paper over this, the templates make the seller disclose it by reference to the character's provenance log, and make the buyer acknowledge having read it. Where an element turns out to be unprotectable, the contract still works as a delivery of files and a covenant by the seller not to keep exploiting the character — which, commercially, is most of what the buyer wanted anyway.

7. Recording the transfer

Section 205 lets a transfer be recorded with the Copyright Office. Recording is optional, but a recorded transfer gives constructive notice and wins priority over a later, unrecorded transfer of the same rights. The assignment template ends with a one-paragraph short-form assignment for exactly this purpose, so the buyer can record without exposing the price and the rest of the deal.

8. Which law, which court

A US buyer and a Japanese seller need an answer before the dispute, not after. The templates let the parties fill in any governing law and forum; when the fields are left blank they default to New York law and New York courts, chosen for predictability in commercial contracts and because it is the jurisdiction most US entertainment and licensing deals already use. A 30-day platform-assisted negotiation comes first, without prejudice to either side's right to sue.

What the platform is not

It is not a party to the contract, not an escrow, not an arbitrator and not anyone's lawyer. It drafts from the template the parties chose, records the signatures, executes the transfer when the seller confirms payment, and compares the files. If the transfer is disputed inside the acceptance window it can reverse it; that decision governs only what the platform does with the accounts, not who was right. For a transaction of real value, both sides should still have their own counsel read the draft — the redline view exists so that reading takes ten minutes rather than an hour.

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