Similar Situation...
We had a similar experience where we found a company in another state that blatantly plagiarized our website and used one of our before/after photos. We politely called him up and asked him to remove it. It took him a couple weeks, but he finally removed it. We were about to send him a bill for using copyrighted material, thinking that might have prompted quicker action...
Watermarking your artwork/photos is definitely a good idea, we have started to do that with many of our larger images. It won't prevent all theft, but it will definitely help. I would recommend including website, email, and/or phone number information in the watermark. That way, no matter where it ends up on the internet, it always links back to your business. If you are really concerned about photo theft, you can talk to your webmaster about disabling right-click and other methods to program your site to not allow copying/downloading. Depending on how savvy of an internet user they are, this will only slow them down, but if they are lazy they will just move on to the next website to steal material.
Also, be wary of third-party web-designers, graphic designers, and copywriting companies; make sure they are reputable and legit. We had a mailer designed by an outside company only to find out (based on our own research) copy was stolen from a competitor's website, and we were never informed of their source. Luckily we found out before having the mailer printed and were able to avoid plagiarizing another company's website ourselves. This is another reason to politely ask a company to remove the material, the company's owner/s may not even be aware of the image's copyright status. Maybe they were just trying to save a buck by hiring their 14 year old nephew to build a website... Maybe you can sell them the rights to use your material... $$$.