They do have the right to sail their proper course, if the overlap is established from astern. If it is outside two lengths, then they have full luffing rights up to head to wind. One side note, before the start gun there is no proper course, and so any overlap, even from close astern gets full luffing rights, but then you have to fall back off to proper course after the gun...
But, like the guy said, he wasn't racing, so it's all moot point anyhow...