Once you create a product/project that is in some ways similar to that of a former employer, you have entered potential conflict-of-interest territory. If you can afford the time and legal expenses to argue that it is not a conflict of interest, that's fine. If you cannot, then you should think twice about what you are doing.
Should it be that way? The answer is a definitive maybe. Part of the reason why the legal system exists is to resolve disputes like this. The real problem is the cost and time involved make it mean that both parties rarely have equal access to it, and that it is often used as a heavy handed threat by those who know they have better access to it (with the end result being to silence people rather than seek a just resolution).
As for the personalities of the parties involved, that has nothing to do with it. You can be the biggest jerk in the world and be right, or the kindest person in the world and be wrong.
The term conflict of interest is meaningless in context of someone who no longer works for you. There just can't be one. If you work for a McDonald's then and open a burger king next door there is no conflict your public goal was first to aid your employer and now it is to destroy them.
It's not a dice roll to find out if you are infringing on IP. If you are aren't infringing you can discourage a lot of bullshit by simply ignoring their strongly worded letter. It costs 30 seconds to send an email but your lawyer needs something real to work with.
If a former employee of mine uses proprietary information to build a competitor, I’d be upset. The key is what is classed as proprietary. You start barking up the software patent tree and you never know what the lawyers will throw back down.
Should it be that way? The answer is a definitive maybe. Part of the reason why the legal system exists is to resolve disputes like this. The real problem is the cost and time involved make it mean that both parties rarely have equal access to it, and that it is often used as a heavy handed threat by those who know they have better access to it (with the end result being to silence people rather than seek a just resolution).
As for the personalities of the parties involved, that has nothing to do with it. You can be the biggest jerk in the world and be right, or the kindest person in the world and be wrong.