REDEngine (as a whole) is not patented; very little software is. It is protected by copyright, but that's a separate issue
No, that's not correct.
If source code is released under, for example, the
GNU General Public License, or
Creative Commons Attribution-Noncommercial-Share-alike, then yes, the entire code is made public and anyone can modify. But they can redistribute only on the same terms they got it, which means that they cannot make money from selling it.
Also, releasing code under an open source license does not stop you selling the same code under closed source license to people who wish to make modification or derivatives and sell them.
So in theory CD Projekt
COULD do this. And, obviously, I would love to have that code to play with. But nevertheless I strongly think they
should not do this, or at least not without very careful thought, because it would almost certainly bankrupt the whole company and we would lose my favourite game development studio.
There are no absolutes. Basically, an engine's creator / owner can decide to do anything or everything with their property if they so choose. Some open-source engines offer everything up-front: the engine is made to be open-source right from the beginning and is specifically marketed as such. This will come along with legal terms for 3rd-parties that wish to utilize it for-profit.
Other engines offer "limited" open-source. The vast bulk of the engine is available, but the "core" code may remain encrypted. In these cases, it may require 3rd-party devs to purchase a more comprehensive license to access everything they need to build their game. (Just as one example.)
The monetization options are certainly not a free-for-all, but neither are they exclusively dictated by this or that policy. As with most things, a studio choosing to use an open-source engine is simply under a specific contract with the owners. Unique terms and conditions will be decided there so that everyone can pursue their goals and get a fair shake.
_______________
All of this being said though, I don't foresee CDPR making the REDengine open-source anytime soon, I don't think. I can only speculate, but I don't imagine they're quite ready to give anything away yet.
And I don't understand why people feel that offering source code would "bankrupt" a studio. That doesn't make any sense. All that it does is market a tool as an additional source of income and potentially generate additional revenue in the form of 3rd-party contracts for use of the engine. It facilitates things like modding, which will invariably increase sales of games that utilize the engine.
The major downside is that the engine becomes more and more commonplace. The biggest negative is probably people becoming tired of the experience, making it harder to generate excitement for new titles being developed on an engine that people are very, very used to. (And still, look at the number of massive hits there are using Unreal or Unity or CryEngine.)
I would say the major consideration for something going open-source is: "Was it designed to be open-source?"
Will people use it?
Will they like it?
Will it be robust enough to inspire innovations?
Or, is the engine quite particular? Was it designed to do a certain thing in a very specific way?
Ultimately, though, it will always boil down to the chef deciding whether or not to share a recipe. If I know that I'm moving on to other things, why not give away the secret? If I have future plans for my restaurant, though, I may continue to keep it in the safe.