Don't know about the cloning of his product, but in terms of negotiation: Don't let yourself get strung along just because someone waves something you want in front of your face.
It's absolutely vital in any negotiation that you set boundaries and that you are are willing to walk away if those boundaries aren't respected. Especially if you really want what they are offering.
In all, it seems the ball spent a lot of the time in their court, and not a lot in his. Either they want the guy or they don't, he shouldn't have to spend months jumping through hoops for the position if they are legitimately interested in his work.
It kinda reads like a Nigeria scam: Just give us one more month and you'll get the money, I swear. It's tied up with customs right now, so if you could just do this one thing...
Whatever bureaucracy they have to deal with is entirely their problem, not his. This tedious non-committal nonsense is not something you should tolerate from anyone. Sure if it's a 2 person startup things may not be smooth, but this is Microsoft we're talking about. They should have their shit together more than that.
Within the general context of someone offering you a position based on your work, they have the privilege of talking to you and should be expected to treat you at least like a peer and not like some random job applicant desperate to get hired.
I don't mean to suggest you should be a diva about it, but that you should respect yourself and be willing to say no to anyone who doesn't.