Had a VERY similar situation here.
Did a logo-ized layout for truck lettering.
Did it on a few corosigns and other stuff.
Customer knew he did not own it, and my contracts all say it's not owned by the client unless purchased from me.
Customer calls, wants the artwork for a billboard. I told him the price
(a good discount too as he is a regular but always a pain to deal with)
He simply had the other company take a picture of the truck I did and then they did a horrendous mock-up of my layout.
He laughed about it when I asked him about it the next time he came for truck lettering.
The billboard was really bad, especially since they gave him everything I never give him (which was everything but the kitchen sink and illegible)
I told him I could make him up a CD of all his files for $250 which he said go ahead.
That particular day he had ordered more
sign lettering, given a deposit, and when I emailed him the heavily watermarked layout he asked if I could send it to him again "without your logo all over it" so he could use it on his website.
I said yes, for a fee.
So he knew he did not own the rights.
He never picked up the CD even tho I called and emailed and said it was ready.
He had more ads made with the hideous billboard layout which was a total bastardization of my work.
So the next year when he needed truck lettering I brought the CD with me and sold it to him for $150.
So he now owns the original stuff. No problem.
But in the inbetweentime he had his secretary's son copy the bad billboard layout into their now "logo" which was even worse than the first stuff.
And he wanted me to put it on his new trucks.
Which after an hour or two of d!cking around I got it somewhat usable and put it on two of his trucks.
So now he wants THOSE files just emailed over to him.
Again I said, for a fee.
Haven't heard back from him.
Burn your files onto a CD.
Go to the guy with CD in hand.
Explain to him that what he did was illegal.
Tell him if he buys the CD now for X amount you will not take him to small claims court.
Love.....Jill