Read the original article on Reuters. The contract is only for the use of Welcome to the Jungle on GH3. Axl's claim is that he only signed that contract after a verbal agreement from Activision that they wouldn't mention Slash or Velvet Revolver or make references to them with respect to Guns N' Roses or Welcome to the Jungle in the game. When Axl found out they lied to him and actually included Slash in the game, he tried to rescind his permission for the use of Welcome to the Jungle. Again, they lied to him, saying Slash was only being used in a demo.
What it all boils down to is contractually, Axl gave his permission. However, he is suing for damages as a result of Activision breaking their verbal agreement and acting in bad faith.
Plus he's still pissed at Slash. Velvet Revolver has a fair bit of success and critical attention, while Chinese Democracy was a long running joke before disappearing shortly after release. Jealous much.