It's not that PayPal want to control their employees after they move on, it's that they want to maintain their trade secrets and make sure the employees actually stick to what they agreed to in their contracts.
This is silicon valley, the wild west. Everyone knows the direction technology will take, it's execution that's so tough. I see Google paying a settlement on this one just like they did with adwords http://news.cnet.com/Google,-Yahoo-bury-the-legal-hatchet/21...