It means that he has donated enough money to the EFF's endowment[1] to fund a position at the EFF in perpetuity. That is, it's a big enough chunk of money that it can sit in an investment account, and the interest can be used to pay for a person's salary and other costs.
Calling it a "chair" just means that Mark Cuban's name gets associated with the position, and the role comes with specific instructions. In this case, fighting stupid patents.
That isn't the case here. While it's a nice sum of money, Notch and Cuban agreed to give $250,000 (the news broke back on Dec 20th about this). That won't be enough to perpetually fund a position, but perhaps enough to hire two lawyers for a year.
Calling it a "chair" just means that Mark Cuban's name gets associated with the position, and the role comes with specific instructions. In this case, fighting stupid patents.
http://en.wikipedia.org/wiki/Financial_endowment