Patent law allows patents to be granted only for specific subject matter. This was rarely an issue until the late 20th century since a patent applicant rarely seeks a patent for an atomic device or something illegal (a few of the subject areas specifically excluded from patent protection).
However, the digital world we live in has presented problems as to where to draw a line between products of manufacture (e.g. widgets) and abstract ideas and scientific principles. There have also been questions at to what a natural product is and the Patent Office has issued guidelines to help examiners determine whether a product is significantly different from that a natural product or process such that it is patentable in view of recent US Supreme Court decisions in MayoCollaborative Services v. Prometheus Laboratories, Inc. in 2012 and Ass’n for Molecular Pathology v. Myriad Genetics, Inc. in 2013.
Section 101 of the Patent law allows patents for "...any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof....." Other things specifically can't be patented including: laws of nature, abstract ideas (e.g., mathematical solutions), scientific principles, atomic weapons, illegal devices, and purely mental processes.
A particularly thorny area for patent law continues to be whether or not computer software or business methods should be patentable. The new PTO guidelines aren't any help relative to patents for software which one is unlikely to be determined a natural product or process. The US Supreme Court along with the lower appellate courts, such as the Fedaral Circuit, have issued various decisions over the years attempting to provide guidance to inventors and patent attorneys relative to patents for software without much success except to muddle things up...The most recent of these cases was the 2010 Bilski decision which provoked further debate on what an "abstract idea" is such that it an invention would be ineligible for patent protection.
The eligibility of computer software for patent protection has again reared its ugly head at the nation's highest court. Arguments were heard last week and a decision is expected in June in Alice Corp v. CLS Bank. The particular issue in the CLS case revolves around computer software which manipulates data by generating instructions, comparing values and sending and receiving data between devices. The software patents owned by Alice Corp relate to risk management in a computerized trading platform and CLS Bank had filed for a Declaratory Judgement that CLS was not infringing these patents.
An interesting point was raised by Justice Scalia during oral arguments when he asked if a cotton gin should be patentable subject matter when it was just doing what was formerly done by hand. One could analogize the calculations done by a computer driven by software to work done by a cotton gin in that both could be done by hand but are more efficiently done by a machine. If a patent can be obtained for a machine doing work formerly done by hand then why not for computer software which helps us find a good Italian restaurant near the exact spot we happen to be standing without looking through three guidebooks and the local phone directory? After all, we could do this by hand too.
As indicated in the article, one of the issues with software and business method patents (and the reason they are often the subject of controversy) is the prevalence of these patents in infringement suits and threats of such suits by so called patent trolls. Such trolls or patent assertion entities are often accused of asserting patents that are overly broad or vague and then coercing potential defendants to pay licensing fees to the troll to avoid litigation.
We should expect to hear from the Supreme Court a test further defining when a potential invention comprises an abstract idea such that it cannot be the subject of patent protection. It seems highly unlikely that the Court will throw out the possibility of patent protection for software entirely.
It should be noted that whether or not a particular invention is subject matter eligible is only part of the hurdle that a patent applicant faces. An innovation must also be new, meaning that the identical product or process was not previously existing, and that it not be obvious to one of ordinary skill in the art based on available knowledge. In some sense the focus on subject matter eligibility for software seems a waste of time given these other hurdles and given previous Supreme Court precedent that Congress intended patentable subject matter to be "...anything under the sun that is made by man." Given the prominence that software has in our daily lives, the idea that a new and not obvious software product, or the portions of such software that gives it an advantage over its competitors, would not be eligible for a patent doesn't make any sense.....particularly if it would be considered new and not obvious, an more importantly if it could help me find that restaurant preparing a perfetto vial milanese when I am in a strange city...