Ask HN: Contractor Vanished, Now What?

After 6 months of development and thousands paid with no milestone notes or evidence of progress, a biochemist I've hired has become completely unresponsive.

His most recent communication suggested that he'd like the right to pursue development of devices identified using the intellectual property (discovered under IP agreements and disclosure agreements that specifically transfer all related IP to my corp) in exchange for notes and prototypes of devices I've already paid him to develop.

My response was to say that doing that would be counter to the agreement he entered into and that he has no right to do so. I have further demanded the notes he's holding hostage under provisions stipulated in this agreement but I have received no response.

The contracts call for arbitration in this scenario, but I'm not sure what courses of action I have available to me.

This is a bit random, I know, but I'm curious to hear if anyone has successfully navigated a similar scenario. Naturally the moral of the story is "get milestone updates, even if they're non-working prototypes." Expensive lesson learned.

Any thoughts would be most appreciated,