"hey have been looking at offering a service/product similar to ours" - that's called a competitor... and they can do whatever they want with your IP - patents or not - you're gonna sue them? Good luck with that, they'll bury you.

I'd finish the product, launch, then talk. Your value isn't going down between now and then, and this is just a distraction.

Just say 'see you on launch day, bring a check".

Background story - we sold our 2 person company (Big Brother) to BigCo (Quest Software)... little did I know that our free product was killing the sales of their $50K a pop product... ohhhh... so that's why they were so interested....