Consider I have an app called MyDiary which is (you guessed) a digital diary and was released on Apple AppStore 6 months ago. After a few months, someone develops an app called MyDiary Free and Plus (paid), which is, as you imagined, a digital diary. Apart from 'change your app name' and 'stop moaning and live on', what can realistically be done in that respect? It's definitely an IP offense! :(
you can report it to apple.. iTunes Content Dispute