How Is Linux Licensed?
Linus has placed the Linux kernel under the GNU General Public License, which basically means that you may freely copy, change, and distribute it, but you may not impose any restrictions on further distribution, and you must make the source code available.

This is not the same as Public Domain. See the Copyright FAQ, ftp://rtfm.mit.edu/pub/usenet/news.answers/law/copyright, for details.

Full details are in the file COPYING in the Linux kernel sources (probably in /usr/src/linux on your system). There is a FAQ for the GPL at: http://www.gnu.org/copyleft/gpl-faq.html.

The licenses of the utilities and programs which come with the installations vary. Much of the code is from the GNU Project at the Free Software Foundation, and is also under the GPL. Some other major programs often included in Linux distributions are under a BSD license and other similar licenses.