I use a program called CodeLock was $50 USD to purchase, if you contact me via PM I will give you an example of the system running so you can see how you like it and if it will suit your purposes prior to purchase.
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Will you ever stop them or recover your losses? Probably not.
My advice...don't waste too many resouces trying to stop it. Take it as a lesson learned...put your efforts into making an even better (and secure) product.
Don't mean to be a downer, but I think that is your best move.
I agree, you always have you look at how much you could have made durring the time you were fighting them. Is it worth it. Sure it is terrible, but you have to look at the economics also. But defenity send a legal looking email or snail mail. A shot of the bow often will help.
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