The below is just about your rights to the software that you write. You can go the GPL route but make sure that you include all the necessary bits. If you want to keep your software closed then take care not to use any GPL libraries or similar parts.
I hope there's enough here and in the linked pages to show that with reasonable care you can write closed code... even if it will make someone, somewhere, enormously sad.
The AVR Lib C license is at the bottom of this page.
http://www.nongnu.org/avr-libc/user-manual/index.html
And here is an explanation of GCC runtime library exceptions, just to be clear:
http://www.gnu.org/licenses/gcc-exception-faq.html
(1st sentence is referring to the 2007 upgrade to GPLv3) The licenses for some libraries that accompany GCC have not been changed yet. These libraries are automatically used by the object code that GCC produces. Because of that, if these libraries were simply distributed only under the terms of the GPL, all the object code that GCC produces would have to be distributed under the same terms. However, the FSF decided long ago to allow developers to use GCC's libraries to compile any program, regardless of its license.
http://arduino.cc/en/Main/FAQ
Physically embedding an Arduino board inside a commercial product does not require you to disclose or open-source any information about its design.
Deriving the design of a commercial product from the Eagle files for an Arduino board requires you to release the modified files under the same Creative Commons Attribution Share-Alike license. You may manufacture and sell the resulting product.
Using the Arduino core and libraries for the firmware of a commercial product does not require you to release the source code for the firmware. The LGPL does, however, require you to make available object files that allow for the relinking of the firmware against updated versions of the Arduino core and libraries. Any modifications to the core and libraries must be released under the LGPL.
The source code for the Arduino environment is covered by the GPL, which requires any modifications to be open-sourced under the same license. It does not prevent the sale of derivative software or its inclusion in commercial products.
http://www.gnu.org/licenses/old-licenses/gpl-2.0.html
Below, the words "the program" refers in our case to the Arduino software and GCC on which it is based, NOT YOUR CODE.
Activities other than copying, distribution and modification are not covered by this License; they are outside its scope. The act of running the Program is not restricted, and the output from the Program is covered only if its contents constitute a work based on the Program (independent of having been made by running the Program). Whether that is true depends on what the Program does.
Thus, it is not the intent of this section to claim rights or contest your rights to work written entirely by you; rather, the intent is to exercise the right to control the distribution of derivative or collective works based on the Program.
http://www.gnu.org/licenses/old-licenses/gpl-2.0-faq.html#CanIUseGPLToolsForNF
Can I use GPL-covered editors such as GNU Emacs to develop non-free programs? Can I use GPL-covered tools such as GCC to compile them?
Yes, because the copyright on the editors and tools does not cover the code you write. Using them does not place any restrictions, legally, on the license you use for your code.
Some programs copy parts of themselves into the output for technical reasons—for example, Bison copies a standard parser program into its output file. In such cases, the copied text in the output is covered by the same license that covers it in the source code. Meanwhile, the part of the output which is derived from the program's input inherits the copyright status of the input.
As it happens, Bison can also be used to develop non-free programs. This is because we decided to explicitly permit the use of the Bison standard parser program in Bison output files without restriction. We made the decision because there were other tools comparable to Bison which already permitted use for non-free programs.
In what cases is the output of a GPL program covered by the GPL too?
Only when the program copies part of itself into the output.
If a library is released under the GPL (not the LGPL), does that mean that any program which uses it has to be under the GPL?
Yes, because the program as it is actually run includes the library.
If a programming language interpreter is released under the GPL, does that mean programs written to be interpreted by it must be under GPL-compatible licenses?
When the interpreter just interprets a language, the answer is no. The interpreted program, to the interpreter, is just data; a free software license like the GPL, based on copyright law, cannot limit what data you use the interpreter on. You can run it on any data (interpreted program), any way you like, and there are no requirements about licensing that data to anyone.
However, when the interpreter is extended to provide “bindings” to other facilities (often, but not necessarily, libraries), the interpreted program is effectively linked to the facilities it uses through these bindings. So if these facilities are released under the GPL, the interpreted program that uses them must be released in a GPL-compatible way. The JNI or Java Native Interface is an example of such a binding mechanism; libraries that are accessed in this way are linked dynamically with the Java programs that call them. These libraries are also linked with the interpreter. If the interpreter is linked statically with these libraries, or if it is designed to link dynamically with these specific libraries, then it too needs to be released in a GPL-compatible way.
Another similar and very common case is to provide libraries with the interpreter which are themselves interpreted. For instance, Perl comes with many Perl modules, and a Java implementation comes with many Java classes. These libraries and the programs that call them are always dynamically linked together.
A consequence is that if you choose to use GPL'd Perl modules or Java classes in your program, you must release the program in a GPL-compatible way, regardless of the license used in the Perl or Java interpreter that the combined Perl or Java program will run on.
And for people who think they have rights that force anyone to provide them with GPL software...
I just found out that a company has a copy of a GPL'ed program, and it costs money to get it. Aren't they violating the GPL by not making it available on the Internet?
No. The GPL does not require anyone to use the Internet for distribution. It also does not require anyone in particular to redistribute the program. And (outside of one special case), even if someone does decide to redistribute the program sometimes, the GPL doesn't say he has to distribute a copy to you in particular, or any other person in particular.
What the GPL requires is that he must have the freedom to distribute a copy to you if he wishes to. Once the copyright holder does distribute a copy program to someone, that someone can then redistribute the program to you, or to anyone else, as he sees fit.