Correct. The way it is limited may of course depend on the local law. For example in Finnish patent law only "real things" can be patented, not products of human intelligence, which limits stuff like algorithms, software, business models etc. outside the scope of patentability.

There have been several instances, however, where large American companies have tried to get Europe to allow software patents. Luckily so far all of these have been blocked:

http://eupat.ffii.org/log/intro/

Imho the best example for this is that the Motorola Droid comes with multi-touch features in Europe, as opposed to the Droid of all countries were Apple holds the multi-touch patent.

I was referring to business method patents, not software patents. Art. 52 paragraph 3 clarifies what's in paragraph 2:

(3) Paragraph 2 shall exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject‑matter or activities as such (emphasis added)

This is where I imagine much of the confusion lies. My interpretation combined with a brief search on google seems to indicate that software could make its way into patentable subject matter if it's a subset of a larger system, but not if its the sole "invention" claimed in the patent.

In other words, if you have a hardware device running embedded software, you could patent the device, including in it "programs for computers." Thus, Art 52 doesn't mean that all inventions including computer software are, as a matter of law, not patentable.