When composing JAVA_OPTS, the current bat script uses this approach:

set JAVA_OPTS=%JAVA_OPTS% %OTHER_STUFF%

However, this leads to issues if the existing JAVA_OPTS had some sort of escape sequence in it.  For example, in my setenv.bat, I add some proxy info:

SET "JAVA_OPTS=-Dhttp.proxyHost=myproxy.localdomain -Dhttp.nonProxyHosts=*.localdomain^|localhost^|appserver.localdomain"

Using the existing approach, the escape sequence ^| gets processed into | leaving the next evaluation to treat it as a command pipe, which causes immediate failure.

If instead you use this approach:

set "JAVA_OPTS=%JAVA_OPTS% %OTHER_STUFF%"

Then those escape sequences are preserved.  Here is the patch for version 7.0.54:

--- catalina.bat_ORIGINAL       2014-08-27 18:37:05.173641700 -0400
+++ catalina.bat        2014-08-27 18:06:22.779721000 -0400
@@ -176,12 +176,12 @@
 if not exist "%CATALINA_BASE%\conf\logging.properties" goto noJuliConfig
 set LOGGING_CONFIG=-Djava.util.logging.config.file="%CATALINA_BASE%\conf\logging.properties"
 :noJuliConfig
-set JAVA_OPTS=%JAVA_OPTS% %LOGGING_CONFIG%
+set "JAVA_OPTS=%JAVA_OPTS% %LOGGING_CONFIG%"

 if not "%LOGGING_MANAGER%" == "" goto noJuliManager
 set LOGGING_MANAGER=-Djava.util.logging.manager=org.apache.juli.ClassLoaderLogManager
 :noJuliManager
-set JAVA_OPTS=%JAVA_OPTS% %LOGGING_MANAGER%
+set "JAVA_OPTS=%JAVA_OPTS% %LOGGING_MANAGER%"

 rem ----- Execute The Requested Command ---------------------------------------