Do away with the watermark.
Employ a barrister or law firm....take them to court for infringement of copyright and retire with the compensation

I think you have every right to email anyone who puts your pics on thier website to remove them within x amont of days or you will take legal action.
Someone who used to come on here regular copied my website almost identically after I had spent perhaps 40 hours of my time on it! I was in two minds whether to contact them to remove most of the content from the site.
I didn't bother because he has a lot of problems himself (no wonder when he pinches other peops ideas!) and it didn't conflict with my business....and I'v better things to do than bother with the parasite :

We can all take photo's from tinternet, but when you have UK firms taking pics and the work you have put into your site, it gets a bit personal and annoying.