I think there is one thing really being forgotton here this is a PUPPY who is still very young, it may be something he is doing just doing to test you. Puppies can be extremely cheeky little things & at times do things like this to simply test their owners boundaries. Please, however you choose to deal with this, don't smack him or scruff him around the neck & shake him, I know many breeders advocate this practice as it is simply how the Dam sorts the puppy out when they are misbehaving.
He is still a very young it is going to be no quick fix unfortunatley, I'm going to suggest something that maybe others & yourself will not like which is place him in an experienced West Highland Terrier home because perhaps as owners you are totally wrong for this poor puppy.
I'm not saying you are bad owners before it gets completely blown out of proportion, just sadly sounds like you are the wrong people for this pup.