Potential competition between my employer's product and my side project

You might not like my answer, but typically any IP developed as an employee (whether at work or on your own time) is owned by your employer. This policy should be clearly described in your employment contract. The philosophy behind employer ownership, particularly since your product would compete with your employer's product, is that your invention is a derivative of the knowledge, know-how, and training obtained as an employee. You claim you developed a product that solves a similar product and serves the same market as your employer's product. The company will argue clear derivation since if you were not employed by them, how would you be aware that such a product was needed and how much of your employee-gained know how was used to develop your product. I would (1) read your employee contract for what rights you may have (you will still be named as an inventor, possibly receive a bonus, incentive or royalty) but the assignee (and owner) would be the employee. Having worked as a patent lawyer in many corporations, I have come across this issue many times and have seen employees virtually destroy their reputation and careers and finances by trying to circumvent their employer's rights. Please bring this issue to your supervisor immediately and try to amicably and professionally seek mutual satisfaction. Our current first-to file laws are secondary to the rights you surrendered for inventions in exchange for monetary compensation when you signed your contract. I urge you to proceed by looking at the entire picture. Let me know how you make out.