You can find the full details over on John Schember's blog. It's technically complicated and quite long. You can also find a non-technical summary here.
The short-short version is that Hamstersoft needs to give away a complete source code for the Hamstersoft Ebook Converter because that app uses parts of calibre, which is licensed under GPL v3. John gave Hamstersoft a month to comply and they did not. Now that app is clearly a GPL violation.
Link to Original Source