JFreeReport is distributed under the terms of the GNU Lesser General Public Licence (LGPL).
The LGPL allows the licencee to use, modify and redistribute the source without having to pay a licence fee. The LGPL requires that all modifications to the library itself must also be licenced under the terms of the LGPL. Products, which include JFreeReport, must contain a copy of the licence text and must make the source code of the distributed version of JFreeReport, available to the user. This source code must contain all modifications made to the original version. The programm itself must allow the user to replace the LGPLed code with modified versions. The simplest way to comply to the LGPL is to ship the sourcecode of JFreeReport with your programm.
Just using JFreeReport does not cause *your* programm to be free software.
The complete text of the GNU Lesser General Public Licence can be found in the Appendix.