you are absolutely right Stephen:
from the legal point of view there is no proof that it is initially yours.
your
own algorithm cannot be considered as a proof as it is only yours and there not enough evidence of his guilt unless the governments
create some sort of organization for intelectual rights, where you can go deposit a copy of your algorithm and key and there is
some sort of a technical commitee that tests it and make sure it can be uniquely identified and that there will be no cover which
can by coincidence seem to have the same watermark.