Every time this situation comes around on the big forum wheel it's always entertaining to read the contributions of those who seem to be running on speculation.
Been there, done that, and here's what you do. You file suit against the client in whatever passes for your local small claims court for the full cost of the sign less all materials. In other words, the real fee for the design plus a bit. You take no action against the other sign outfit, they are not culpable.
Print off screen shots showing the contents and creation/modification dates of the pertinent files.
Print a copy of at least the salient articles of the Berne convention which grants you copyright to your original work merely by virtue of the fact that it exists. No notices or warnings required, just existence is sufficient.
This is and your brief truthful story is all you'll need. When I say brief, I mean just that. No emotion, no convoluted reasoning, just the facts, your exhibits, and your statement that the Berne convention applies in this case.
If you actually end up in court you have pretty much a slam dunk. You will be awarded your design fee, the court filing fee, and whatever fee to serve the papers on the client. Do not do the service yourself, hire the local sheriff's department. This is what they do.
If, after you have a judgment against the client, he refuses to pay up then go to the same sheriff's department and do whatever it takes in your village to put a mechanics lien on any and all of the client's assets. Including a chain on his door. Essentially, you put him out of business until he pays the judgment.
It's time consuming and a pain in the ass but it works and serves as a warning to others that you are not about to be screwed with.
