I'm working on a startup and I have come to know that AVR is closed source so I wonder if I can use their chips inside my commercial product?
Assuming that anything sold publicly is a commercial products, countless Chinese products are sold commercially with AVR chips in them.
Arduino itself contains an AVR chip (ATmega168, I think).
Or take for example the Convoy flashlights, which use ATtiny84 to handle the extra features (blinking, temperature measurement, ...).
But really, the examples are countless.
What would be the business case of Atmel, if the chip could not be used in commercial (= remunerative) products?