I'm not a lawyer, but wasn't part of the background that prior to 1988
in US law one could not claim both copyright and trade secret protection,
and that for something to be copyrighted it had to expressly claim to
be copyrighted material, and be registered as such?
Trade Secret is not compatible with copyright and patents (in a patent you have to disclose how to make and use the invention while a trade secret must be kept secret).
You can get a patent while having the automatic copyright protection – remember that they protect two different things. A patent protects the “functionality” while a copyright protects what is written, word for word. So, you can get patent protection for what a software program does while having copyright protection for what is written. A patent is a stronger form of protection.
because the legal folks thought that trade secret was a stronger
protection for software?
I also seem to recall that the AT&T code base included original material
from CSRG where the copyright notice had been removed by USL.
All in all, the USL lawyers probably felt that they would lose the case if
fought on the grounds of copyright violations alone.
I wish something like Groklaw had existed during the USL-UCB case: the
legal twists and turns would have been documented a lot better.
There is some material though, see:
http://www.groklaw.net/staticpages/index.php?page= legal-docs#bsdi
The amicus brief by the Regents, and the settlement make for interesting reading.
If the position taken by the Regents is correct, all of Unix up to and including 32V is in the public domain now.