Just a quick correction on point 3, lest someone get too confident they're in the clear: the law about employees owning their own inventions is the default in California, but you can sign an employment contract that signs away those rights. (IANAL, by the way.) Also relevant to HN readers: a lot of those protections are moot if you're acqui-hired: the CA-specific protections about noncompete being unenforceable does not apply if you were an equity holder during an acquisition. Just an FYI.

Also, the default is narrowly defined: if you do it entirely on your own time, with your own equipment, and without using any ideas etc from your employer, you're in the clear.

Maybe most importantly, you're only "clear" in theory; in practice you're 'fine' for exactly as long as your (ex-)employer doesn't decide to sue you.

Also, keep this in mind when it comes to lawyers and lawsuits: they produce a huge, huge amount of uncertainty. We'd like to think of the legal system in this country as a process that consistently produces just outcomes; in practice it's noisy and biased against small operations. You can be 100% morally in the right, and even 100% legally in the right, and still have a bad outcome. Specifically: I've been told at length that getting 'damages' when you're sued without cause -- that is, having your legal bills paid by the frivolous party -- is an extremely high bar to clear.

Furthermore, lawsuits and appeals can drag on for months and years (particularly absent any binding arbitration clauses). Does it do your startup any good to get your money back 18 months later? Probably not, and if you die along the way they win by default.

That last point is what Smule's CEO seems to be counting on when he says 'we win if we're wrong'. And I guess I'm just saying, he's correct. He's not right, he's definitely wrong, but he's correct. Just my (morbid) two cents.