It's not right, but it happens all the time. IMHO, if you can get past the rage, sell him the bank of hours. If he really wants to talk with you that badly, ask for an agreement with a piece of the action (thought I doubt he'll sign it).
Listen, ideas truly are a dime a dozen. Implementation is hard. Facebook, myspace, friendster...all the same idea. If this guy can do it, good for him.
Take the money and run. If you can't do that, bring the same idea to a competitor and see if they bite and will make you a deal.
The OP gave away too much up front, and it's hard to fault the other guy (from a business perspective) for just implementing what he was given for free. He was effectively consulting with no contract or compensation.
That said, it's a fairly bad-faith move to take the idea and implement it without paying for it, and if the OP can afford it, should just cut ties with the company and move on.
It'll forever be tainted because the other guy launched the product first. The OP will look like a copycat at best or just like he feels his former business partner is in the worst case.
We saw how it worked out with the Winklevi, the other dude actually implemented the idea so he deserves the spoils.
Listen, ideas truly are a dime a dozen. Implementation is hard. Facebook, myspace, friendster...all the same idea. If this guy can do it, good for him.
Take the money and run. If you can't do that, bring the same idea to a competitor and see if they bite and will make you a deal.