I hear many people talking about non Open Source PHP (I assume its closed source PHP).
How does it work? I'm interested about trying to encode the footer part where my product author link is located. What are the best options for that?

Thank you.

Google obfuscation.

It may not be what you think of.
PHP is a scripted language. It means that every time a request is done to a php page, the php engine reads the source, translate it in "computer language", runs it and produces an output.

What those obfuscator/encrypter are doing, is that they eliminate the step to translate the source code into "computer language" and they usually encrypt it too with a password (defined when you generate the "encrypted" file), to allow some peoples who knows that password to re-create the original source file and modify it.

What it does not, is to prevent peoples to look at the source code of your generated page, and copy it.
It does not protect your code on the browser side, but only on the server side.

The 2 most known solutions are
° Zend guard [ http://www.zend.com/en/products/guard/ ]
° Ion cube encoder [ http://www.ioncube.com/sa_encoder.php ]

I never used Zend guard, but 1 enterprise I worked for used Ion cube, and it was a really great product.
It goes further than simply preventing modifications:

• Prevention of file tampering through use of digital signatures.
• Prevention of unauthorised files from including encoded files.
• Generating files to expire on a given date or after a time period (Pro/Cerberus Encoder).
• Restricting files to run on any combination of IP addresses and/or server names (Pro/Cerberus Encoder).
• Restricting files to run on specific MAC addresses (Cerberus Encoder).
• Customised messages when files expire or aren't permissioned to run.
• Encrypt arbitrary files, for example XML files, Smarty template files, or images.
• Generate license files to restrict access to encoded files (Pro/Cerberus Encoder).

There's also Source Guardian, but I like ION Cube.

BTW: Obfuscation simply means hiding or making non-obvious. It doesn't convert it into machine code or anything like that.