Reading it now. Seems to me that the relevant questions are whether granting publication rights to "serial or episodic series television film material" under the 1966 MBA only constitutes the publication of the teleplay, or whether that can be expanded to include a novelization of the teleplay, or whether it can be expanded to include an original novel incorporating elements from an episode such as characters, and whether this applies to any writer or only to freelance writers.
Wow. Sounds like he's pushing for a rather broad interpretation of "publication rights." The complaint says the contract doesn't limit the meaning of the term "to include only word-for-word replications of teleplays," and is asserting that publication rights should also apply to works that make "substantial use" of elements from such teleplays.
Personally, if I'm understanding everything correctly, I'm actually hoping that Ellison's contention that the "publication rights" term ought to be broadly interpreted to include original novels incorporating characters or elements from an episode is denied by the court, or at least is interpreted less loosely than Ellison is contending. It seems to me that if you do what Ellison wants, then that ends tie-in novels' ability to really do anything creative, because the copyright owners wouldn't actually make money off of it. A typical New Frontier novel, for instance, might owe money to Joe Menoky (Robin Lefler), the Michael Piller estate (Shelby), Ronald D. Moore (Jellico, the USS Excalibur), and Theodore Sturgeon (the pon farr concept).
If we're going to broaden the definition of publication rights, I'd prefer to see it in terms of, say, the fundamental plot of an original novel being predicated on the plot of a TV episode. So, something like Errand of Fury III or the Crucible trilogy would lead to CBS owing money to the Gene Coon estate and to Ellison, but something like New Frontier wouldn't owe money just because it uses a character.
I think that the claim in the lawsuit can more reasonably be interpreted as applying to the former case. If a book actually adapts scenes and dialogue from the episode itself, that could qualify as a new "publication" of the teleplay and fall under the rights specified in the agreement. If that were the finding, then we'd probably get no more books like Crucible or The Good That Men Do that directly (or almost directly) adapt significant portions of episodes. But applying it to original stories that use the same characters and concepts (for instance, First Frontier or Imzadi, which use the Guardian but don't depict any scenes or events from "City") would be a much broader interpretation, one that would probably be crippling to the tie-in industry. And one that I suspect would be much harder to justify as a valid interpretation of the 1966 MBA.
So I think Ellison has a better case with regard to Crucible than with regard to something like the Hallmark ornament. I mean, as Lonemagpie points out, the form of the Guardian depicted in the ornament wasn't created by Ellison; the Guardian he described would've looked entirely different. The object in the ornament was the creation of TOS's art and construction departments. The uniforms depicted in the ornament were the creation of William Ware Theiss, and the likenesses depicted in the ornament are the intellectual property of William Shatner and Leonard Nimoy. So there's nothing in the ornament that comes directly from Ellison's script. I can't see any reasonable definition of "publication rights" extending to something like that.