AFAIK (IANAL) the moral right cannot be assigned/transferred, and AFAIK using
a software in a non-free manner could violate the author intentions about the
code. IMHO the Canonical agreement is too weak to imply proprietary license,
and a simple "This is free software" on every file (as it is in normal use)
clear the author intentions.
Thus: IMO Canonical cannot distribute a non-free version of Upstream.
PS: This is probably a lot European-centric, but considering that a lot of
developers write software in Europe, it is a good deterrent to bad things.