Kinda looking at both sides from just one sides post:
John got 50 to commit for partial tooling cost.
In the Form of a deposit {probably non refundable}
Reason i say this is has he gotten deposits and then gave it back he would be out total cost.
And was not able to make the Item and recoup the cost you and he have.
It was a gamble on all parties parts. You also mention it may be illegal for him to sell them when made. So at this point the tooling is a loss to everyone involved.
I have no dog in this fight and am not siding with anyone.
Just what I read into what i have read so far from the Op and others.