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To quote the license itself:

Copyright (C) [year] [copyright holders]

Permission is hereby granted, free of charge, to any person obtaining a copy of this software and associated documentation files (the "Software"), to deal in the Software without restriction, including without limitation the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the Software, and to permit persons to whom the Software is furnished to do so, subject to the following conditions:

The above copyright notice and this permission notice shall be included in all copies or substantial portions of the Software.

I am not exactly sure what the bold part implies.

Lets say that I'm creating some library, and I license it under the MIT license. Someone decides to fork that library and to create a closed-source, commercial version. According to the license, he should be free to do that.

However, what does he additionally need to do under those terms? Credit me as the creator? I guess the "above copyright notice" refers to the "Copyright (C) [..." part, but, wouldn't that list me as the author of his code (although I technically typed out the code)?

And wouldn't including the "permission notice" in what is now his library practically license it under the same conditions that I licensed my own library in?

Or, am I interpreting this incorrectly? Does that refer to my obligations to include the copyright and the permission notice?

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up vote 6 down vote accepted

The commercial software would need to include the copyright notice for the work it has used. It doesn't mean the entire commercial work is then licensed under the MIT license.

For example, I would expect to see the copyright notice for the commercial software, with the following wording added:

This software includes the Yannbane Awesome Library: Copyright (C) 2012 Yannbane

Permission is hereby granted, free of charge, to any person obtaining a copy of this software and associated documentation files (the "Software"), to deal in the Software without restriction, including without limitation the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the Software, and to permit persons to whom the Software is furnished to do so, subject to the following conditions:

The above copyright notice and this permission notice shall be included in all copies or substantial portions of the Software.

So by including the license, they are letting people know what terms the "Yannbane Awesome Library" is licensed under - as it is different to the terms of the wider commercial application.

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Exactly. It's not unusual for a large product to include several such copyright notices. For example, check out about:license in Firefox. –  user281377 Dec 6 '12 at 10:21
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