A software license lets you do something that you otherwise would not be allowed to do, given the limited permissions granted by Copyright law. That is, it changes the "all rights reserved" into "some permissions granted and all other rights reserved." Which permissions those are depends on the license; which exceptions to "all rights" exist depends on the jurisdiction under which you're operating (e.g. while "Fair Use" is something you can do in the United States, that concept doesn't exist everywhere).
There's lots of software licenses. There's even lots of Free Software licenses. The Free Software licenses all grant you permission to do at least four things: use, study, modify and share. Sometimes they allow more. The BSD license allows proprietization. The Apache license allows the use of patents embodied in the software (important in jurisdictions with patents). The GNU General Public License allows you to format shift (e.g. you may publish a GPL licensed program as a T-shirt).
The flip side of permissions is that of conditions: often the permissions are granted provided that you do something else. For instance that you pay for the permission (a proprietary, commercial license would require that). Or that you give the source code of the program to recipients of the binary (as the GPLv2 says). Or that you send your modifications to the original author if you distribute the code in modified form.
The conditions may also include a condition that the same license applies to derivative works. The GPLv2 has such a condition. The EUPL has such a license (plus an escape clause). The CDDL has one. This kind of condition creates an "species" around a single license of like-licensed software. Such a species has software individuals that can be freely combined and modified and shared, since it all falls under the same license.
This kind of condition also creates a division, one between species, because you can't "breed" between species. The conditions of licenses of two different species cannot be satisfied simultaneously, so you can't do it. As a consequence, we see that the same functionality is developed multiple times under different licenses. Some might call that wasteful. It's out in the open, though, and reimplementation only needs to happen once for each species, so the waste of effort is limited. Who knows how much sloth and useless duplication occurs behind closed doors? In any case, we find that a license with conditions creates its own species and that most software combination works within that species.
So-called "permissive" licenses can cross the species divisions, simply because they do not have any conditions that prevent them from being integrated into another species.
If you're a software developer who is combining pieces of software which are under different licenses, you need to be aware of the species differences. Indeed, sorting out which code can be combined with which can be a considerable effort. The FSF lists dozens of Free Software licenses and whether they're compatible with the GPLv2 and the GPLv3 -- and even the GPLv2 and GPLv3 are different species.
So we have two problems with having lots of species: that of duplication of implementation effort (yes, I too have had to ignore an available Free Software component that did what I needed and had to re-implement it badly because of license incompatibility) and of effort involved in checking for compatibility.
The underlying problem -- that of having many license species -- is what we call license proliferation: there's lots of licenses, and more show up all the time. Black Duck software identifies some 1200 of them. The OSI has 60-odd licenses. That's a lot of extra effort.
So when people ask the FSFE about software licenses, in particular about creating a license with new conditions or that varies an existing one, we say "don't do it."
That bears repeating:
Do not write a new (Free) software license. Just don't. Really. Pick an existing license that does what you need. And if there isn't one, then what you want is probably not a good idea.
I'm aware that's an argument from authority. That's not always a good kind of argument to use. However, you need to be aware that in creating a new species (by creating a new license) you're committing yourself to the whole rigamarole of re-implementation, and excluding people from outside the species.
Now, as with almost every rule (except rule 34), sometimes the rule is just a guideline. People who know what they're doing can bend the rules.
There can be really good reasons to bend the rules. For instance, new dangers show up that threaten the Free Software ecosystem. These dangers may be a reason to introduce a new license to counter them -- patents, for instance. Who would have though, too, of valuable trademarks in Free Software? They're explicitly mentioned in the more modern licenses. A simple permissive license that disclaims warranty might not be sufficient if regulatory frameworks change. And in some areas of business, existing regulations might require things of a software license that the existing ones do not provide.
So there can be good reasons to change. And in spite of my position that license proliferation is bad, I'm going to applaud the Mozilla Foundation for choosing to look into updating the MPL (coverage from the Register here).
The MPL is a file-based license, not a work-based license, so it creates species in a different way. Clause 6.2 of the existing MPL allows a transparent upgrade procedure, so I think the proliferation aspect of this license update doesn't need to be stressed. They're doing the right thing. The content of the license change isn't firmly fixed yet: Mozilla is still in the comment phase. Results are expected later in 2010. I'm looking forward to meeting some of the people driving the process in Mozilla next month, for a chat over a glass of wine as to which bits of compatibility are the most important.
So here's to licenses; let a thousand choices bloom.
PS. Ideally, I think that each license would make a clear statement about what it means in each of the essential areas of licensing. Unfortunately, those "essential areas" have changed over the years, so many do not do so. I hope for a clear new world where we have a small collection of modern licenses (say, Apache v2, GPLv3, MPLv2 and a new permissive license) that define the main species of Free Software.
PPS. Although I think that this applies to every blog post, I think I should add explicitly here: this post does not reflect an official FSFE position on the Mozilla license.