Canonical kept the copyright.
But, even if they didn't, they would still be able to use bzr in Launchpad. For starters, bzr
does not necessarily have to be so closely tied into the Launchpad code such that the terms of
the GPL would apply to the combination. Secondly, they're not distributing binaries or source
of Launchpad, so they would not have to release the source anyway.
Launchpad isn't non-free as such, it's just another big custom web-app. (But that's a whole
different debate.) I'm told the Launchpad team are still working hard on getting the code into
a good enough shape to release.