The Apache License is recognised by the Open Source Initiative as a popular and widely used licence with a strong community. It is used by only about two percent of the open source-licensed projects on the software repository Sourceforge. It is an interesting licence to compare with the Berkeley Software Distribution (BSD) licence, which it resembles in some ways. This document attempts to draw together the main features of the Apache License into a friendly and comprehensible digest, and in addition to note some details about its history and usage. The licence itself can be read at http://www.opensource.org/licenses/apache2.0.php.
Beginning in 1995, the Apache Group (later the Apache Software Foundation) released successive versions of their well-known httpd server. Their initial licence was essentially the same as the old BSD licence, with only the names of the organisations changed. When Berkeley accepted the argument put to it by the Free Software Foundation and retired their advertising clause from the BSD licence, Apache did likewise and created the Apache License v1.1 - a slight variation on the modified BSD licence. In 2004 Apache decided to depart from the BSD model a little more radically, and produced the Apache License v2.
One unintended upshot of the creation of the Apache License v2 is that it became incompatible with the GPL v2. Previous versions, being heavily based on the BSD licence, were compatible. However the restriction in v2 that terminates the grant of patent rights if the licensee sues over patent infringement is seen by the Free Software Foundation as a restriction that is not present in the GPL v2. This being the case, code that is licensed under the Apache License v2 cannot be combined with GPL v2-licensed code and distributed. The Apache Software Foundation itself argues that the GPL v2's section 7 (which terminates the right to distribute if an external body places additional restrictions on the distributor) is similar enough to their patent clause to make them effectively the same restriction. Unfortunately, as the licences stand, the commonly accepted view remains that they are incompatible.
However, with the release of the GPL v3, this incompatibility is no longer insurmountable. The GPL v3 allows for the addition of a patent retaliation clause whose effect is to allow code from a GPL v3-licensed project to be combined with code from an Apache 2-licensed project. So, a major milestone has been acheived and the two licences are no longer incompatible.
Like the BSD licence, the Apache License v2 permits code that it covers to be subsumed into closed source projects.
OSS Watch has produced a document that highlights the main legal issues to consider when releasing your code under an open source licence.