That is pretty egregious, and its also par for the course. And that is why startup companies go through all the hoops of being "stealth" and having NDAs and what not. There was a German VC firm that was, as I recall, very upfront about this. Clone a successful US company before it got to the European market. On the one hand it is great to have validation of the idea, on the other its a pain to have someone with more…
This situation looks very egregious though.