This article is from the rec.arts.sf.movies FAQ, by Evelyn C. Leeper firstname.lastname@example.org with numerous contributions by others.
(The following answer is taken from a posting by Jerry Boyajian.)
Ellison filed suit against the studio claiming that THE TERMINATOR
was plagiarized from his two teleplays for THE OUTER LIMITS. One was
"Soldier" (based on a short story he written years before), in which
a soldier is zapped from a future war zone into the present and causes
all sorts of problems. In addition to basic plot similarities, the
scenes of the future in THE TERMINATOR are very similar in look and
feel to those in "Soldier".
The other teleplay was "Demon With a Glass Hand", in which a lone man
with a glass-and-computer-chips hand and a woman he meets up with are
on the run from some unknown enemy. He has amnesia and doesn't know a
thing about who he is, or why he's in his current situation. Eventually,
he finds out that he's from the future and was sent to the present on
a mission to save the human race.
Separately, I feel that THE TERMINATOR is a legitimate variation on the
ideas presented in Ellison's stories. However, taken together, it would
seem as if James Cameron got the idea from Ellison's stories, in which
case, Ellison is owed something. At any rate, as the story goes, the
studio was going to fight the suit, but in preparing their defense, they
found out from someone in the production crew that Cameron had quipped
on the set about how he'd "ripped off a couple of OUTER LIMITS episodes".
At that point, they decided to settle out of court, giving Ellison some
undisclosed amount of money and inserting the credit.
(Thomas Pluck (email@example.com) adds the following:)
You left out one important thing with the Ellison/Cameron suit; the
concept of Skynet, the military supercomputer that sees all humanity as
the enemy, was taken from Ellison's short story "I Have No Mouth and I
Must Scream," collected in the book of the same name and various other
SF anthologies. Ellison's computer called itself AM, and it kept five
people alive to torture for all eternity because it hated its creators
so much. The two OUTER LIMITS scripts plus that short story are half or
more of the TERMINATOR plot.
[Many think the above should not be included. I have no opinion. -ecl]