Bilski v. Kappos is a case currently before the Supreme Court of the United States (SCOTUS) regarding the patentability of an idea without a tangible implementation. Scotus wiki summarizes:
"In seeking a patent, Bilski and Warsaw told the Patent Office in 1997 that their idea was a highly useful one: using complex mathematical formulas, they could tell a business how to hedge against risk due to the rising and falling of prices of raw materials that were used to produce something — say, to generate electricity. Commodities prices often fluctuate quite widely, because of market forces or even changes in the weather, so these two inventors figured out ways to manage what they called “consumption risk.” It is, they claimed, of benefit both to businesses and to their customers."
This hedging strategy was rejected by the patent reviewer because it was not a concrete implementation of an idea, simply a concept. Courts have long held that mathematical axioms or algorithms are not patentable, as they are part of natural law. The most recent affirmation of this by the appeals court identified that an idea must be tied to a particular machine or apparatus or be involved in the transformation of an article to a different state to be patentable. This is now referred to as the "machine-or-transformation" test when considering patentability of an idea. The appeal before the Court aims to overturn this decision.
This has huge implications on the software industry as a whole. In an age where companies patent the most simplistic and abstract of ideas in hopes of future infringement, often the creation of new standards and technology is painfully inhibited by attempts to avoid such Intellectual Property (IP) traps. Companies rush to artificially build an IP war chest to hedge their inevitable infringement on others' IP. The number of trivial and otherwise trite patents that exist in this realm is simply staggering, and it is nearly impossible to develop without a devil-may-care attitude regarding infringement. It is a nightmare for any software development effort and for the engineers associated with them.
Similar, Donald E. Knuth, Professor Emeritus at Stanford University and one of the world’s most respected computer scientists, wrote in 1994, “When I think of the computer programs I require daily to get my own work done, I cannot help but realize that none of them would exist today if software patents had been prevalent in the 1960s and 1970s.” ... Dr. Knuth also stated, “I strongly believe that the recent trend to patenting algorithms is of benefit only to a very small number of attorneys and inventors, while it is seriously harmful to the vast majority of people who want to do useful things with computers.”
This quote, offered by the RedHat's amicus brief in support of affirming the decision, captures the essence of the problem. RedHat's argument is well-reasoned and is worth a read if you can ignore the painfully verbose, legalese nature of the document. Be sure to read the various arguments on the Scotus Wiki and keep track of the eventual decision from the Court. Also note who filed amicus briefs in support of the petitioner (i.e. Overturning the decision) vs. supporting the respondent (Affirming the decision).