He was paid to work on a CI tool, by a firm that sells development services. Even if we assume that tool would never, ever be sold to customers, releasing a product that erodes their competitive advantage is still foul play. It's dirty pool.
We don't know exactly what contract he signed with his employers, but this would not be permitted by any reasonable contract.
Working on a similar product as your last but rebuilding from scratch under a different employer (in this case himself) is by no means uncommon. Employees are often poached from companies specifically because of their experience in a field. There are contracts that require you not compete in a field after you quit (probably illegal n some states), but my impression is that those are less common. You can't take the code, or possibly event significant portions of how a system works, but your experience in the field is yours and yours alone.
The sticky part of this is where he started working on this (in his free time) while still employed for the original company. That, along with what we don't know about his employment contract, makes this hard to reason about.
NY and CA have laws that limit the scope and length of valid non-compete agreements.
In many other states, wide-ranging, long-term non-competes are practically universal. Personally, I've been asked to sign contracts that would effectively ban me from working in tech, period, for two years after departure.
We don't know exactly what contract he signed with his employers, but this would not be permitted by any reasonable contract.