In the case of AT&T Corp. v. Excel Communications, the Court of Appeals for the Federal Circuit was faced with a claim directed to a method for use in a telecommunication system where the essential novelty lay in creating a message record that included an indicator of whether or not the recipient of the message in respect of which the record was being created was one of a predetermined list. The invention involved the application of Boolean algebra to data relating to information about the caller and the recipient to determine the appropriate indicator. The purpose of the invention was to enable long distance telephone carriers to provide differential billing depending upon the primary long distance carrier selected by the recipient of the call. The case differed from the Alappat and State Street cases that were discussed in our November 1994 Newsletter (N.S. 184) and our March 1999 Newsletter (N.S. 190) in that in both of those cases the claims related to machines.

In the present case the claim was to a method. The Federal Circuit first pointed out that "whether the invention is a process or machine is irrelevant" to deciding whether a computer-related invention constituted patentable subject matter. Nor did the fact that the invention involved application of Boolean algebra take it outside the ambit of patentable subject matter. The Boolean principle was being applied to produce a useful, concrete and tangible result without pre-empting other users of the mathematical principle. The defendants argued, however, that some form of "physical transformation" was required in order to comply with the requirements of previous case law. The Federal Circuit did not agree. Following State Street and Alappat, the question that needed to be addressed was not that of whether or not there was a physical transformation but "whether the mathematical algorithm is applied in a practical manner to produce a useful result". In the present case it was being so applied.