This seems somewhat standard. The company is trying to protect its IP (and probably overvalues it). You could try to negotiate a lower term or change the language to carve out generative AI that wouldn’t compete with them.
Don't need to trust me. https://legal.thomsonreuters.com/en/insights/articles/the-ba...
> As for a time limit on a non-compete agreement, most employers see between six months and two years as a reasonable non-compete time frame, with one year being quite common. However, the time frame depends on the industry and type of career path the individual has. But the longer the duration of the non-compete period, the more likely a court will deem it unenforceable.
In California non-compete agreements are not allowed, and some other state have a hard limit on the length, eg, 1 year for MA - https://www.katzlawgroup.com/non-compete-agreements - and 2 for IL - https://www.navigantlaw.com/non-compete-2-year-rule-long-wil... .
To be sure, these examples concern employees, not contractors, but I doubt it differs. OP should check if 3 years is even legal in their state, and regard this as a bad sign about the client. It means they want to play hardball, so you as a client will have to be on your toes and play hardball too. Which I don't think is fun.