By closed I mean not available for free use and distribution, for example in open source projects which can't pay any royalties. May be saying free format would sound more clear, since you are right, closed is a bit ambiguous, as it can also mean a format without published specification which needs to be reverse engineered to be used.
Also, I don't think that H.264 forbids only commercial use. Can you freely distribute their decoders and encoders? What about putting them in hardware for non commercial use?