An interesting point came up on another thread about alleged misappropriation of a GPL project. In this case the enterprise software was used by some large companies who essentially took the code, changed the name, removed the GPL notices and used the result.

The point was - if the company did this and only used the software internally then there isn't any distribution and that's perfectly legal under GPL. Modifications by their own employees for internal use would also be allowed.

So At what point does it become a distribution?
Presumably if they brought in outside contractors under 'work for hire' their modifications would also be internal and so not a distribution.

If they hired an external software outfit to do modifications and those changes were only used internally by the company - would those changes be distributed? Does the GPL apply to the client or to the external developers?

If the company then give the result to another department, another business unit, another company? What if the other company is a wholly owned subsidiary?

ps. yes I know the answer is ask a lawyer. But all the discussion I have seen over GPL2/GPL3 distribution has been about webservices - not about internal use.