From an Arduino Prototype to a Commercial Product

Yes, with the following conditions:

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.

In all cases, the exact requirements are determined by the applicable license. Additionally, see the previous question for information about the use of the name “Arduino”.

You can use Arduino to make a commercial product following some simple rules.

* if you have made your circuit as a derivative of the Arduino board you must release the design files with a CC-BY-SA license like the original cad files

* If you build your circuit as a shield that plugs on top of an Arduino board all the circuit is yours and you don't have to release anything

* The programs written on Arduino are yours. if you have modified the core files or one of the libraries you must make your modifications available to everybody

* You can call your product in any way you like as long as you don't call it Arduino

* If in the documentation for your product you want to write "Powered By Arduino" that would be appreciated 🙂

* There is no revenue sharing for any derivative work (unless it uses the Arduino name see http://www.arduino.cc/en/Main/Policy )
having said this.

The code on the Arduino can be read after it has been programmed.
It will be available only in binary form but can be programmed on another board (i.e. copied) There is a "fuse" that you can burn that will make the code unreadable but it will also make it hard for you to update your code once it's on the board.