You're not allowed to compete with the company you used to work for or use your "proprietary knowledge" to undercut it. There's lots of potential reasons companies claim, some legit and some not:
1. I have training or specialized skills I acquired at the companies expense and I will be using them to compete against the company.
2. I have "insider knowledge" that they believe would amount to corporate espionage.
3. I know something that could cause harm to the company or its clients (ex. I used to do tech support for a series of store chains and I was not allowed to work for them upon leaving because my knowledge would make it trivially simple for me to steal from the store).
Those are just some of the thought processes. I don't think it's that you couldn't make money self employed, but you couldn't make it doing the same thing you were doing for your former employer (i.e. making a feed reader).
1. I have training or specialized skills I acquired at the companies expense and I will be using them to compete against the company.
2. I have "insider knowledge" that they believe would amount to corporate espionage.
3. I know something that could cause harm to the company or its clients (ex. I used to do tech support for a series of store chains and I was not allowed to work for them upon leaving because my knowledge would make it trivially simple for me to steal from the store).
Those are just some of the thought processes. I don't think it's that you couldn't make money self employed, but you couldn't make it doing the same thing you were doing for your former employer (i.e. making a feed reader).