This is a pretty typical set of legal rules in design competitions.
The idea that you will come up with anything that new and innovative is pretty funny. Most likely anything that is entered will be derivative and already in development by somebody somewhere if it hasn’t been done already. If you have something that revolutionary… don’t enter into what is essentially a beauty contest.
These types of rules usually server to protect the company from entrants. Lets say you come up with a cool flip hinge for your entry and LG already has something very similar in development. They don’t pick your idea to win because they already have something similar g that you happened to not be aware of because it was confidential. 18 months later LG produces this phone with a very similar hinge to your idea. You sew them. Its a mess. These rules prevent that.