The only reason "ip issues" exist is because an employer says so, and they can say otherwise at any time.
If the customer wants something, then you the vendor either give them what they want, or don't.
It's no one else's problem.
There are no "ip issues" preventing an employee from working on a competing product, only from doing so without permission which the employer is free to grant at any time.
This possible issue does not provide any tiniest bit of of excuse, and does not invalidate the critiques at all.
No one is "caught in the middle" in any way that anyone else has any obligation to care about, not even a merely "being a nice and considerate person" obligation.
If the customer wants something, the vendor can absolutely satisfy them any time they want by a number of different means. And certainly this employee is no voiceless intern, is both knowledgeable and empowered enough to inform his employer about those means. If they don't employ any of those means, it's no one else's fault and so no one else's problem.