Yes, it was. Bell was operating under a consent decree dating from 1956 which prohibited it from doing much beyond phones and telegrams. Bell didn't want to piss of the government, so it played it safe and declined to enter the software business when Unix was first developed, allowing it to spread on a more informal basis, including the source code. It did enter the software and Unix business when the consent decree expired, leading to System III and System V, which were closed-source.
