Personally speaking I would put them on notice of legal action, and follow it up where possible. Its theft of IP.

I would also try an ensure a 'non compete' clause for 6-12 months when purchasing, the response to that could indicate any potential issues.

Despite having a zillion legal nuts and bolts, if someone wants to get around something they will! A friend or a relly might startup something similar, and you cant really stop that kind of thing, however if its using the IP you bought then thats a different kettle of fish.

Find and develop a relationship with a decent legal type, and dont be scared of taking legal action