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Free, as in Speech
Hibernate is Free Software.

Hibernate is licensed under the LGPL v2.1. The LGPL is sufficiently flexible to allow the use of Hibernate in both open source and commercial projects. The LGPL guarantees that Hibernate and any modifications made to Hibernate will stay open source, protecting our and your work. Anyone who wanted to release Hibernate under a different license would have to obtain permission from hundreds of people who have contributed code to Hibernate, which would be impractical. Hibernate is and will be open source distributed under the LGPL.

The use of the unmodified Hibernate binary of course never affects the license of your application or distribution. You will never have to pay money to any commercial entity for using or integrating Hibernate.

If you modify Hibernate and redistribute your modifications, the LGPL applies. Please submit any modifications to our issue tracking system for review and possible inclusion in the upstream Hibernate project(s).

Further reading
Open Source Development - An Introduction to Ownership and Licensing Issues http://www.oss-watch.ac.uk/resources/iprguide.xml
Why you shouldn't use the Library GPL for your next library http://www.fsf.org/licensing/licenses/why-not-lgpl.html
Derivative Works http://www.linuxjournal.com/article/6366