This is a matter of non-compete agreements, signed by private parties. Personally, I think it's totally reasonable to ask employees not to work on competing products in their off-time. As an employee, I have signed such agreements myself. The author appears to have signed such an agreement.

We can disagree about this. You, personally, are free not to sign these agreements with your employer, because you feel the request is unreasonable.

(Trade secrets are different. That's typically governed by state law, no special agreement required: http://en.wikipedia.org/wiki/Uniform_Trade_Secrets_Act)