... solely for licensee's internal business purposes...

Now AT&T's idea of internal purposes was a bit odd, since it sold not only licenses to use its software for business or educational computing, but also allowed its source to be used to produce flavors of Unix for sale by computer companies. It did this, because under an antitrust settlement until recently, it couldn't be in the computer business itself. While under this restriction it developed a back door approach of licensing companies selling Unix flavors, allowing it to be in the market by proxy. It was reluctant to enter the retail OS software business on its own. It had its focus on the computer hardware business and the 3B computer series. In fact, shortly after the IBM agreement, it spun its Unix operation off into USL and sold Novell a share.

To cover this resale process IBM signed an additional sublicensing  agreement -  SOFT-00015A. This agreement allowed resale of the SP to customers who agreed to use the SP for internal use on a single machine without reverse engineering it, transferring it or exporting it.

What would neither be internal use nor covered by the sublicensing agreement, however, would be to use the SOFTWARE PRODUCT (for this was what AT&T called its IP) in a Unix making package that would compete with the one AT&T was licensing, in whole or in part, or with future uses AT&T might be reasonably expected to contemplate. Any customer who did this would have to be sure that the SP (We have become tired of typing SOFTWARE PRODUCT, and this is our story, so SP it is) was not used in creating the COMPETING PRODUCT (we too can do this foolishness). So doing would violate the basic agreements (like SOFT-00015) and also the covenant of fair dealing, for it was obviously not the intention of AT&T to allow this. Moreover the advantage in so doing was clear. As was observed by the judge in the Berkeley decision, there is an obvious advantage to someone developing a work-alike system to have a working system for comparison and testing. This can save enormous amounts of time. This is over and above any advantage gained from using the methods and concepts of the SP (which the standard commercial license prohibited, though this was subject to the laws of trades secrets). IBM got a letter from the AT&T licensing manager, signed by his assistant, striking language forbidding the use of the "methods and concepts" of the SP and substituting a prohibition on referring to the SP, when producing anything:

Nothing in this agreement shall prevent LICENSEE from developing or marketing products or services employing ideas, concepts, know-how or techniques relating to data processing embodied in SP subject to this Agreement, provided that LICENSEE shall not copy any code from such SP into any such product or in connection with any such service and employees of LICENSEE shall not refer to the physical documents and materials comprising SP subject to this Agreement when they are developing any such products or service or providing any such service.  If information relating to a SP subject to this Agreement at any time becomes available without restriction to the general public by acts not attributable to LICENSEE or its employees, LICENSEE's obligations under this section shall not apply to such information after such time.

There are a number of unanswered questions about this letter, its meaning and the authority of the signer to modify the basic agreement, if that was what he was doing. We will argue that the letter did not and could not have been intended to allow IBM to intentionally use any nonpublic methods and concepts of the SP as a basis for an OS development package that competed with the SP.

A clever reader may have noticed that the quoted language doesn't talk about a competing product. That's because the uses contemplated were for products that did not directly compete with the basic product sold by AT&T. It would clearly not be covered by the sublicensing agreement, nor would it be internal use, so the only language that can be interpreted to allow this is the paragraph quoted above. It defies reason that AT&T would have agreed to this if it believed the products or services were to be a donation to an organization that would license it in competition with AT&T.

Some years later (in 1996) IBM negotiated a  buyout of its license in an agreement called Amendment X. This struck the prohibition on reference to the SP in producing IBM's own products, but, again, the use in producing a directly competing product was not contemplated. Why, after all, would Novell and the Santa Cruz Organization [SCO1] (for Novell had bought the the balance of USL from AT&T and was selling it to SCO1) sell something to IBM so cheaply, when SCO1 was paying 40 times as much, though, in fairness, SCO was buying a functioning business as well. Still, such an agreement would undermine the value of what SCO1 was buying.

It was everyone's fondest hope that they would live happily ever after, but, alas, it was not to be, for the curse of Berkeley lay upon AT&T and their heirs.