Canonical has explained why it has licensed H264. As it turns out, the license does not cover the distribution as a whole – since Ubuntu is entirely Free software, the license cannot be included. Canonical has licensed H264 so that it can offer it as an option to OEMs, just as it does with Flash, Fluendo, and some others. Since this is just an option for OEMs, it does not mean that every pre-installed Ubuntu system comes with the H264 license – it depends on whether or not your OEM decided to include it (good luck finding that out). And people actually promote this complicated spaghetti licensing situation.