Startups: &#39;directly competitive&#39; what does that mean?
<p>In a founders agreement. It states: </p>

<blockquote>
  <p>The Founders must refer to the Company, in writing, all opportunities
  to participate in a business or activity that is directly competitive
  with the Project</p>
</blockquote>

<p>What is the legal definition of 'directly competitive'?</p>

<p>Say the above founders agreement was for company A. the 'Project' as stated in the founder agreement was a technology that consisted of: an off the shelf depth sensor, an off the shelf server, and an off the shelf computer chip. The core IP of the project was software which could detect certain characteristics which a hospital would be interested in. The project was not fully complete, and did not at any point, get any funding or sales. It was basically a half prototype. The project has also been terminated by company A in June 2018, and no one in the company has worked on that project since then. The company is now working on a completely different project. </p>

<p>Now company B is a company which creates depth sensors(similar to one of the off the shelf items used in the 'Project'). It contains algorithms for identifying visual characteristics that the sensor gets. It could potentially be purchased and used for the 'Project' and if a direct competitor has similar technical requirements to company A, it theoretically could also be bought by them too. Company B has not been involved in this yet.</p>

<p>If a founder from Company A, decides to work part time for Company B today, as part of a team that builds the algorithms for detecting objects in its sensors, must this founder 'refer to the Company, in writing' about the part time work? I understand that it is ethical to do so, but is it <em>legally required?</em></p>

<p>This founding agreement was made in early 2018, and has not been updated. The information in the founding agreement (such as equity arrangements) is also not updated. The founding agreement includes a vesting agreement for 4 years since early 2018.  </p>

<blockquote>
  <p>The Founders must refer to the Company, in writing, all opportunities to participate in a business or activity that is directly competitive with the Project</p>
</blockquote>

<p>Who cares?</p>

<p>All the founder needs to do is make the referral to comply - the company can’t stop them working on it as worded. Refer anything that’s tangentially related and your obligation is discharged.</p>

competition