I really agree with the sentiment of audition projects. The interviews I have enjoyed the most all involved some sort of take-home project, although I have never been paid for one. On that note, how expensive does it become for a startup to dole out many interview projects across a wide range of candidates? I think a better strategy would be to conduct preliminary interviews and then based on some granularity, assign…
Here's a problem with audition projects: I would never be able to take part in one, since my current job contract has a clause forbidding me from simultaneously working for any competitor in the same field. (This is a German job contract; I don't know if such clauses are common in the US or elsewhere, too.) So in order to work on an audition project, I'd have to be unemployed already.
But specifically if you were taking an interview rather than working a side job you could make the argument that the clause didn't apply in any case.
It all comes down to how much you pissed off your ex-employer by leaving, and how much they want revenge. No-one is going to gain anything from suing you after you've moved jobs.