The university acquired a UNIX source license from AT&T. Students of the university started to modify and improve the AT&T Unix and called this modified version "Berkeley Unix" or "BSD", implementing features such as TCP/IP, virtual memory and the Unix File System. The BSD project was founded in 1976 by Bill Joy. But since BSD contained code from AT&T, Unix, all recipients had to get a license from AT&T first in order to use BSD.
In June 1989, "Networking Release 1" or simply Net-1 – the first public version of BSD – was released. After releasing Net-1, Keith Bostic, a developer of BSD, suggested replacing all AT&T code with freely-redistributable code under the original BSD license. Work on replacing AT&T code began and, after 18 months, much of the AT&T code was replaced. However, six files containing AT&T code remained in the kernel. The BSD developers decided to release the "Networking Release 2" (Net-2) without those six files. Net-2 was released in 1991.