There has been considerable FUD of late asserting that if a company inadvertently incorporates GPL code into its proprietary code, they can be forced to release their proprietary code under the GPL. This isn't new FUD. It's old FUD, but in some new mouths. Even some attorneys have been saying this in the media and at various conferences. While it's not a crime to misunderstand the GPL, and it certainly isn't rare -- a lot of people don't understand the GPL, including some lawyers -- it does arouse unnecessary fears about whether the GPL is safe to use or work with. Is it true? Can you lose your code this way? No, and the reason why it's FUD and not the truth hinges on the GPL being a license and not a contract.
A lot of the confusion about the GPL stems from this central issue: Which is it? A license or a contract? The reason that matters is because if it's a contract, then you enforce it under contract law, which is enforced state by state, and there are certain necessary elements to qualify as a valid contract. If it's a license, then it's enforced under copyright law, and that's enforced on the federal level according to the terms of copyright law, not contract law. The penalties available are not the same.
Let's analyze and see how this all relates to the recent FUD. First of all, what is a license? A license is basically just a permit, a permission to do something you otherwise wouldn't be allowed to do. When I want to go fishing, for example, I have to get a fishing license from the local municipality. That's a license, as its name implies. But why? Why isn't it a contract? Because there are no further agreed-upon promises, no reciprocal obligations. It would be a contract if I said to the owner of a pond: if you give me a license to fish in this pond, I'll give you half of all the fish I catch. In that scenario, each of us has voluntarily entered into a kind of promise. We each give the other something of value, so if I get the license and then I don't give over half of all my catch of the day, the pond owner can sue me for not living up to the terms of the contract.
Here is a definition of 'license' from Steven H. Gifis' "Law Dictionary, 2d Edition:
"LICENSE: A right granted which gives one permission to do something which he could not legally do absent such permission; 'leave to do a thing which the LICENSOR [the party granting the license] could prevent.'"
A contract, on the other hand, is defined like this: 
"a promise, or set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. I Williston, Contracts Section 1. The essentials of a valid contract are 'parties competent to contract, a proper subject-matter, consideration, mutuality of agreement, and mutuality of obligation.' 286 N.W. 844, 846: 'a transaction involving two or more individuals whereby each becomes obligated to the other, with reciprocal rights to demand performance of what is promised by each respectively.' 282 P. 2d 1084, 1088. 'The total legal obligation which results from the parties' agreement as affected by law.' U.C.C. Section 1-201."
I don't have to promise anything further to go fishing after I pay for my license or sign up for it or whatever the town requires. Once I have my license, I'm free to fish, as long as I abide by the terms.
Eben Moglen, the Free Software Foundation's attorney, who is primarily responsible for enforcing the GPL, explains the difference between contracts and licenses like this:
"The word 'license' has, and has had for hundreds of years, a specific technical meaning in the law of property. A license is a unilateral permission to use someone else's property. The traditional example given in the first-year law school Property course is an invitation to come to dinner at my house. If, when you cross my threshold, I sue you for trespass, you plead my 'license,' that is, my unilateral permission to enter on and use my property.
"A contract, on the other hand, is an exchange of obligations, either of promises for promises or of promises of future performance for present performance or payment. The idea that 'licenses' to use patents or copyrights must be contracts is an artifact of twentieth-century practice, in which licensors offered an exchange of promises with users: 'We will give you a copy of our copyrighted work,' in essence, 'if you pay us and promise to enter into certain obligations concerning the work.' With respect to software, those obligations by users include promises not to decompile or reverse-engineer the software, and not to transfer the software."
Very clear, but what about the GPL? Which is it? A license or a contract? First, the name tells you what the authors intended: General Public License. It doesn't say General Public Contract or even General Public License Contract. So they intended it to be a license, not a contract. Does it fit the definition? Professor Moglen:
"The GPL, however, is a true copyright license: a unilateral permission, in which no obligations are reciprocally required by the licensor. Copyright holders of computer programs are given, by the Copyright Act, exclusive right to copy, modify and redistribute their programs. The GPL, reduced to its essence, says: 'You may copy, modify and redistribute this software, whether modified or unmodified, freely. But if you redistribute it, in modified or unmodified form, your permission extends only to distribution under the terms of this license. If you violate the terms of this license, all permission is withdrawn.'"
Suppose a company really did mingle GPL code into a program with their own proprietary code and then distributed the merged product under a proprietary license or without living up to the terms of the GPL? Now what happens? What will the judge do now? Order the code released under the GPL over the wishes of the owner?
Stop and think. What happens if you violate the terms of a fishing license? For example, the license may restrict how much fish you can catch on a particular day or what kinds of fish you can keep, what sizes, etc. Suppose you violate the terms of the license. What happens? You lose your license to fish. There may be a fine to pay, right? That's essentially the same thing that happens under the GPL, except it's nicer, because the company gets to choose what it wishes to do under the terms of the GPL. If it still isn't resolved, and it goes to a judge, however, it's enforced as a violation of copyright law, not contract law. Here is Professor Moglen's explanation of what happens:
"Because the GPL does not require any promises in return from licensees, it does not need contract enforcement in order to work. A GPL licensor doesn't say in the event of trouble "But, judge, the licensee promised me he wouldn't do what he's doing now." The licensor plaintiff says 'Judge, the defendant is redistributing my copyrighted work without permission.' The defendant can then either agree that he has no permission, in which case he loses, or assert that his permission is the GPL, in which case he must show that he is obeying its terms. A defendant cannot simultaneously assert that the GPL is valid permission for his distribution and also assert that it is not a valid copyright license, which is why defendants do not 'challenge' the GPL.
"The claim that a GPL violation could lead to the forcing open of proprietary code that has wrongfully included GPL'd components is simply wrong. There is no provision in the Copyright Act to require distribution of infringing work on altered terms. What copyright plaintiffs are entitled to, under the Act, are damages, injunctions to prevent infringing distribution, and--where appropriate--attorneys' fees. A defendant found to have wrongfully included GPL'd code in its own proprietary work can be mulcted in damages for the distribution that has already occurred, and prevented from distributing its product further. That's a sufficient disincentive to make wrongful use of GPL'd program code. And it is all that the Copyright Act permits."
So when you read people say that the GPL is perhaps not enforceable because you don't sign it or click on a form, or because of a lack of privity, or because there is a lack of consideration, or some such, you'll understand that the person misunderstood and thought in terms of contract law. It's a common error. They don't shoot you at dawn for not fully understanding the GPL. But at the same time, it's good to know that the problems people think they see in the GPL generally are the result of not understanding it, not from any weakness in the GPL itself.
Most software today is licensed to you, actually. Here are some examples of such software licenses, or just read your Microsoft EULA. The GPL is no freak of nature in that respect. The license says, in effect, I still own my own stuff, but you can use it under the following restrictions and conditions. When you buy Microsoft Windows, you don't own it. You get to use it under a license. The only part people have trouble getting their heads around is the fact that the GPL grants you additional rights, whereas most EULAs further restrict rights beyond the restrictions of copyright law, which is in essence "the power to exclude" in the first place, as the GPL FAQ explains it.
And the waters are further muddied by the fact that proprietary licenses, although named as such, really are set up more like a contract. Here is how Rod Dixon, Esq., author of the blog "Open Source Software Law" and the book by the same name, explains it:
"More specifically, the drafters of the GNU GPL have consistently viewed the GPL as a software license. This is likely to mean that a copyright holder who licenses her software under the GPL, and subsequently brings a law suit against an individual who allegedly violated a term under the GPL would sue for copyright infringement rather than breach of contract. In this case, the alleged infringer could not raise a number of defenses that might be available to someone alleged to have breached a contract. Since, generally, no one has a right to use copyright protected software except the copyright holder, the defendant cannot argue that he did not click on a consent button on a website or otherwise agree to be bound by the license. . . . As a practical matter, copyright holders often raise both types of claims in litigation: breach of contract and copyright infringement. In many of those cases, however, the copyright holder has adopted a software license that is undoubtedly meant to be a contract."
A license like the GPL, on the other hand, which is a true license by intent, and which, if you remember the original definition, is a permission to do what otherwise you could not legally do, fits the definition of license precisely. So when you hear that the GPL is viral and can force proprietary code to become GPL, which a couple of lawyers have been saying, you'll know that isn't true. If you steal GPL code, you can expect enforcement, if the violation isn't cured, but it can only be enforcement of a license, not a contract, and a forced release under the GPL can't be imposed on you under copyright law. It's not one of the choices, as Professor Moglen has explained. You do have a choice under the GPL license: you can stop using the stolen code and write your own, or you can decide you'd rather release under the GPL. But the choice is yours. If you say, I choose neither, then the court can impose an injunction to stop you from further distribution, but it won't order your code released under the GPL. This is because under copyright law, as Professor Moglen explained, your penalty is the injunction, damages, and maybe attorney's fees. Your code remains yours, as you can see, even in a worst case scenario. 
Of course, you could avoid all such troubles in the first place by not stealing GPL code to begin with. But if something happens inadvertently and some rogue employee sneaks some GPL code into your proprietary product, the sky isn't falling. It's a manageable risk and a solvable problem. No one wants to steal your code in retaliation or force it to be something you don't want it to be. The GPL is unequivocally a license, and that's the truth.
 If you are interested in further reading, you can read Moglen's OSDL position paper or Lawrence Rosen's paper on the SCO litigation or the GPL FAQ itself, linked to in the article.