I can't speak to formal letters of the law, but I've been going to conventions all of my adult life. Except for the ones run by Creation, most of them were spontaneious events generated by fans for fans. First a question, where did you hear that this event was for profit? I've not heard that. But aside from that, the original festivals were not run with the express approval of Dan Curtis Productions, neither were their predecessors, the Shadowcons. The early Star Trek cons were all done by people who love the show.
As for this even competing with the festivals, I don't see it that way. In the 80s I went to every event I could. If that meant going to a Manhattan Shadows, a DS Festival, a DS Fellowship Fair (Louisvile, KY), and even an LA DS fan club event (which I combined with a trip to Vegas), I'd go. I'll continue to go to Festivals AND Friends of DS, if they continue and things go well. The only factor for me will be timing. I have a family now and can't afford to fly out for everything. I try to make DS events work with my trips to Newport RI. This year I happen to be on the East Coast for this event. Next year, if I can work it, I'll go to a festival. One year I went to a Manhattan Shadows event one week and to the very first festival the next! No competition.