Unfortunately its developmentally appropriate behaviour. Some children do it because they are teething and the pressure is really bothersome. Have you tried offering the child something else to chew/bite on? Also, children this young don't have the communication skills to address their discomforts and is an effective way for them to get their point across. I'm not exactly sure that a "time-out" for a 16 month old baby will be very affective in this case.
Here is a link to more reading material.
http://www.handinhandparenting.org/n...-Toddler-Bites
There is a ton of resources out there on this topic and it might also be important to let other parents know (if they are concerned about this child biting their children) that is it a normal development stage some children go through. Maybe even write up a hand out with key facts so parents understand that it will pass and that you are doing everything in your power to keep the children safe and what is developmentally appropriate while this plays out.
It is definitely frustrating, I've been there myself several times... just know that it is a phase and it will pass!
Best of luck!