What is the alternative? Do we force everybody to undergo mind wipes whenever they leave the company so they don't take any skills they picked up on the job with them?

How many people can forget everything they know every time they get a new job?

I think it's a balancing act with plenty of gray area. Personally, I almost always side with employees in cases like this, because it's ridiculous to me that a company could claim ownership of things that its employees create which are unrelated to their jobs, or which they produced with their own time and resources.

But I also think that there are some people who are exceptional cases. The real high earners in a company, especially if they're technical staff, are probably real luminaries in their field, and the company is paying them a significant premium in both money and autonomy because they believe that such an employee will produce a lot of valuable new ideas for the company.

So if your rock star programming wizard quits to start a new company, taking a project that they've been iterating on during work hours on their company computer for the past 6 months while they were drawing a paycheck...well, if you look at it from the company's point of view, you can understand why they would feel like they got robbed blind.

The alternative is probably non-compete contracts (which are enforceable if paid) so that people don't immediately go from one company to its direct competitor.