[fidelis]

"Caterpillar does a nice business on their licensed apparel, and if they don't defend their trademark every time, then the next time someone will simply point to this case say, "See, they don't defend their trademark, therefore it is null and void." Even if they lose this one in court, they benefit from demonstrating a strong defense of their trademark. Don't blame Caterpillar. Blame trademark law."

Yeah, I can totally see how the Cat and Cloud apparel line could be mistaken for that of Caterpillar:

[Bubba Ho-Tep]

Yeah, I can totally see how the Cat and Cloud apparel line could be mistaken for that of Caterpillar

Not the issue. The issue is that they've registered a trademark for apparel with the word "Cat" on it, and Caterpillar already has one. If Caterpillar doesn't challenge it, their trademark could be construed to be diluted. If Cat and Cloud had just printed their logo on t shirts and hats and sold them, there'd be no problem. But by registering the trademark in an area in which Caterpillar already has one, they've run into trouble. Frankly, their trademark lawyer, if they had one, should have warned them. I run things through legal for a trademark search all the time and frequently get the response that pursuing something would be "high risk," as they put it, in very similar circumstances.