I can not agree with his interpretation of the "reverse technology transfer" clause. I suspect he lacks the knowledge of how to work with a licensed engine. This is not about an undefined amount of work CIG should do. What CIG only has to do is to send their current status of CryEngine to CryTek at least once a year (and at the end of the project). CIG was never obliged to fix bugs in the engine or to implement new features. Only if they do it all belongs to Crytek.
Such a paragraph AFAIK not necessarily common but Crytek said that they have given CIG a discount on the license. This clause could well be a consideration for this discount.
In sum, I would see it that way:
1. I do not see the claim that CIG must use the Cryengine.
2. If you do not use the engine you do not have to name it or even advertise it.
3. The license is for a game containing SC and SQ42. Both must be sold together. A separate sale is explicitly excluded. But maybe feasible with rhetorical tricks. Since CIG only advertised and sold SQ42 but not deliveed they could not complain that CIG has released a second game with the CryEngine without a license.
4. CIG must return all changes to Crytek as long as it uses or has used the CryEngine. I'd even go so far as to ask Crytek to prove that CIG has completely upgraded the Cryengine before installing Lumberyard. If they did not do that but just did a delta update from Lumberyard, they still strictly used the CryEngine plus parts from Lumberyard.
5. CIG has probably made at least small parts of the Cryengine third accessible. But I can not judge whether this has really caused a significant damage.