Was the name used with permission? Even if not trademarked (because open source freedom woohoo), it's a bit weird to release, say, Windows 12 without permission from the authors of Windows 11
I tried looking it up myself but it doesn't say in the readme or doc/ folder, there is no mention of any of the Bzip2 authors, and there is no website listed so I presume this Github page is canonical
Free software doesn't have a lot of trademarks, with the notable exception of Linux.
Also, the name is the algorithm. Bzip2 has versions and bzip3 is something else which has its own updated versions. Programs that implement a single algorithm often follow this pattern.