Basically a business may hire two types of individuals.  These two types of individuals are employees and independent contractors.  If you hire an employee here in California, the law favors the employer being the owner of any intellectual property created by the employee, even intellectual property created by the employee while "off the clock" as long as it is related to the work the employee is performing for their employer.  However if an employee signs an intellectual property agreement with their employer then the intellectual property agreement will prevail.  If you are an engineer or computer programmer, in most cases, when hired you were asked to sign an agreement whereby you agree to release to your employer all intellectual property that was created during the period of your employment.  Refusing the sign the agreement will likely not grant you any intellectual property rights as by law you are required to turn over your intellectual property to your employer.  However, if you sign an intellectual property agreement that states you may keep any intellectual property you develop during the period of your employment then the agreement will prevail against the law and you will retain your rights to IP that you create.  This situation is, for the most part, reversed when it comes to independent contractors.  Unless the independent contractors signs an agreement to turn over any intellectual property that is created in the course of working for the company the independent contractors retains all rights to the created intellectual property.  There are exceptions to these general rules and you should talk with an attorney to get an answer for your specific case but what sets an independent contractor apart from an employee?  

The Internal Revenue Service (IRS) states that "The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done."  Here the word "payer" is the company that is paying the individual doing the work.  The IRS also provides the following details:

There are many considerations to take into account when licensing your intellectual property.  Adding to the complexity of the agreement is that each type of intellectual property, whether it be patents, trademarks, or copyrights, have different concerns and problems that you need to pay attention to.  For example with trademarks you will want to pay attention as to how your mark will be treated by the licensee.  How will they be displaying your mark?  What sort of training will they provide their employees?  However here are some general guidelines for you to consider when licensing your intellectual property.

• Don't download and reuse a license agreement you found on the internet.  Although such an agreement may look great and cover everything it is not the agreement for you.  Each license has special needs and many factors to consider.  Reusing an existing license agreement and just changing the names will very likely cause you lots of heartache and worse a loss of rights.
• Remember that in a licensing agreement you are giving someone the right to infringe on your intellectual property.  Make sure that in the terms of the agreement that the licensee will use the same level of care as you would use to protect your intellectual property.
• Pay special attention to the terms in the agreement related to royalties, termination, confidentiality, and transferability.  Many times problems in these agreements are in these clauses.  Review them carefully and run them through as many scenarios as possible to find possible problems and weak points.
• Many times when licensing one intellectual property you may be also licensing another.  For example, say that you are licensing a patent to a formula for paint and the agreement is to transfer the rights to the formula to a distributor so they may bring the paint to market.  What may also need to be transferred is any know how or trade secret as to the manufacture of the paint and it needs to be included in the agreement.

• Consider who is to retain the rights to any improvements or derivatives in the intellectual property.  Say the intellectual property is a musical score and the licensee has modified the musical score.  Who owns the rights to the newly modified musical score?  What royalties will you, the licensor, have to the new musical score?

Success in these five areas will enable both you and your licensee to focus on what is really important about the agreement - allowing both of you to profit financially from the agreement.