Now this is worrying, but I have to say, it sounds to me like he asked for trouble! As a freelancer I become more and more aware of how important confidentiality and contract can be.
The article says, 'an ethics code bans employees from competing with Columbia', well, HELL YEAH! Isn't it a bit disrespectful to work for direct competitors? I know that and do occasionally turn work down, because I feel that there is a conflict of interest there. In fact should you get pigeon holed as a freelancer, this can become a big issue as it will limit the amount of work you can take on. SO, my advice is, don't get pigeon holed! If I have a kids footwear contract, I won't work on another kids footwear contract that season, unless it is for a drastically different company.
You also have to consider that if you work for two rival companies, you could quite easily be accused of copying the other companies ideas, even if you didn't because if the brief is similar, the designs you come up with could be similar, without you even intending it. I wonder if this is what happened with the designer in this case? Perhaps he didn't intend to use ideas he had developed for Columbia, perhaps it just looked that way.
Any designers reading this would probably agree with me, that especially with fashion, it's quite possible to all come up with the same idea at the same time with absolutely no knowledge of what the other designer is doing. That's how fashion works. If I go into a charity shop and see a vintage pair of shoes that I'd have balked at a year ago and suddenly they just look spot on, invariably it means that it a trend that is developing.
There was a discussion about this on ID forum Core 77 last week, it's called Ideas are Like Waves http://boards.core77.com/viewtopic.php?f=5&t=19704
When I worked as a designer at Pentland Group we had clauses in our contract and freelance work was forbidden. Whilst I was there a designer (not a footwear designer, but a graphic designer) was sacked for moonlighting. I guess they were lucky they didn't get taken to court like this guy.
Fact is, if you are an employee, you are being heavily invested in by your employer. They not only pay your salary, your health insurance and your pension and all your expenses and buy your equipment, but they own your ideas that you create there and they rely on you to be able to keep a secret!
If you can't handle this and you are bored of the same brand day-in-day out, then you better go freelance, but you better be able to keep a secret as a freelance shoe designer, or word will soon get around that you cannot be trusted!
If you want to be an employee, then some companies (I'm thinking of Nike) will let you freelance for other companies, but does that includes direct competitors? Hmm I wonder.