As far as I know, the license incompatibility is on the GPL side of the equation. As in, shipping a kernel with the ZoL functionality is a violation of the GPL, not the CDDL. Thus, Oracle would not be able to sue Canonical (Edit: or, rather, have any reasonable expectation of winning this battle), as they have no standing. A copyright holder of some materially significant portion of the GPL code of the kernel would have to sue Canonical for breaching the GPL by including CDDL code.

I am not a lawyer.

The Software Freedom Conservancy did a legal analysis and concluded that the incompatibility comes from both sides[1]. This also applies to the pre-2.0 MPL that CDDL was based on.

A lot of people focus on the fact that the CDDL allows binaries to be arbitrarily licensed so long as you provide the sources, but the issue is that the GPL requires that the source code of both combined and derived works be under the GPL and the CDDL requires that the source code be under the CDDL (i.e., the source code cannot be sublicensed). This means that (if you concluded that OpenZFS is a derived work of Linux or that it is a combined work when shipped as a kernel module) a combination may be a violation of both licenses.

However, the real question is whether a judge would look at two open source licenses that are incompatible due to a technicality and would conclude that Oracle is suffering actual harm (even though OpenZFS has decades of modifications from the Oracle version). They might also consider that Oracle themselves released DTrace (also under the CDDL) for their Linux distribution in 2012 as proof that Oracle doesn't consider it to be license violation either. If we did see Canonical get sued, maybe we'd finally be able to find out through discovery if the CDDL was intentionally designed to be GPL incompatible or not (a very contentious topic).

[1]: https://sfconservancy.org/blog/2016/feb/25/zfs-and-linux/

Oracle do also make GPL'd contributions to the Linux kernel. So by that reasoning , they would have standing.

It would be an interesting lawsuit as the judge might well ask why as copyright holder of ZFS they can't solve the problem they are suing over. But I think you underestimate the deviousness of oracle's legal dept.