"Littergram invites people to share pictures of rubbish."
It's pretty clear that -gram here is used to signal that this is a picture sharing app.
If Instagram didn't exist it's unlikely Lucas would have called his app Littergram.
I think they put the wrong app name in there. Given that sentence, they are identical apps.
But yes, I agree, the similarity in app functionality suggests that the name derives/can be confused with Instagram as opposed to a telegram, and so there may well be merit in the C&D.
"Littergram invites people to share pictures of rubbish."
It's pretty clear that -gram here is used to signal that this is a picture sharing app.
If Instagram didn't exist it's unlikely Lucas would have called his app Littergram.