Hard to tell whether yours is a true (general partnership) or a business entity and the answer would depend on the nature of the entitty. Protecting your "business" is very fact specific and impossible to determine from the above. You may both be "free" to go you separate ways, but there may be smart way versus a sloppy way to do that. That's teh advantage to having a lawyer versus a legal site like Avvo which gives analysis on general legal questions (but not legal advice.)
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
You need to consult with a business lawyer in the LA area as soon as possible. Frank Chen, Michael Doland, and Pamela Koslyn, among others, are in the LA area and give good advice on Avvo. I am sure there are many others. Do you have a written partnership agreement, and if so, what does it say? Has he actually invested resources into the business? Answers to these questions, among many others, may have an effect on the advice to give.
www.bayoaklaw.com. 510-208-5500. This answer does not create an attorney-client relationship. It is not legal advice, because it is only of a general nature. Please contact a lawyer qualified in your jurisdiction to discuss your situation in confidence, using your factual details. Avvo answers are only general legal responses. Item 9 of Avvo.com's Terms and Conditions are incorporated in this disclaimer as though it were printed here.
You need an attorney on this matter. While your current business entity does own certain proprietary information and opportunities related to your joint development, your best defense is a good offense. You want to present your partner with documentation related to his release of any proprietary business ideas in exchange for compensation. Such compensation could come in many forms. Depending on your business structure, it may be in your best interests to keep your partner in the business because he would have a fiduciary duty to the business not to compete.
There are several ways to look at your project that will be very fact specific and based on your business arrangement, business entity ( Corp or LLC?), and any signed agreements among the partners. Good luck to you and I wish you great success.
This information is general and will change according to your facts. While this information may apply to your situation, without more facts I can not encourage you to rely on this information. I am not your attorney. No attorney client relationship exists. You should hire an attorney for your specific business matters.