## Facts

- AT&T owned U.S. Patent No. 5,333,184, which claimed methods and systems for generating “enhanced” call message records for long-distance telephone calls.
- The claimed enhancement added an indicator field (a primary interexchange carrier (PIC) indicator) reflecting whether the calling and called parties were presubscribed to the same long-distance carrier.
- The indicator enabled “differential billing,” including discounted rates for “on-net” calls (same carrier) and different rates for “off-net” calls (different carriers).
- The claims described generating a call message record with conventional call data plus an indicator showing whether a discount rate should apply; Boolean logic was used to determine the indicator’s value.
- AT&T sued Excel (and related entities) alleging Excel’s billing practices infringed the patent.
- The district court granted summary judgment to Excel, holding the claims invalid under 35 U.S.C. § 101 as an unpatentable mathematical algorithm because they manipulated data using Boolean algebra and lacked a sufficient physical transformation.

## Issues

1. Whether the patent’s method and system claims, which use Boolean algebra to set a PIC indicator in a call message record for differential billing, claim patent-eligible subject matter under 35 U.S.C. § 101.
2. Whether characterizing the claims as “data manipulation” or a “mathematical algorithm” renders them nonstatutory when the claims are tied to a telecommunications billing application.

## Decision

- The Federal Circuit reversed the summary judgment of invalidity under § 101.
- The court held the claims were within § 101 because they applied mathematical principles in a practical process that produced a “useful, concrete and tangible result.”
- The court rejected a categorical requirement that a process must include physical elements or a physical transformation to be patent-eligible.
- The case was remanded for further proceedings on issues not reached by the § 101 ruling (including infringement and other defenses).

## Legal Principles

- Section 101 is construed broadly, subject to exclusions for laws of nature, natural phenomena, and abstract ideas.
- A claim is not ineligible merely because it uses mathematics or Boolean logic; ineligibility concerns claiming the algorithm or abstract idea itself rather than a practical application.
- A process that applies an algorithm to achieve a “useful, concrete and tangible result” can fall within § 101, even when it primarily manipulates data.
- Patent eligibility for a process claim does not turn on the presence of a physical step or physical transformation when the claim is directed to a specific, real-world application rather than an abstract formula.

## Conclusion

The Federal Circuit held that claims directed to generating call message records with a carrier indicator for differential long-distance billing were patent-eligible under § 101 because they applied Boolean logic to produce a specific, operational result, and it reversed the district court’s contrary summary judgment and remanded.


AT&T Corp. v. Excel Commc’ns, Inc., 172 F.3d 1352 (Fed. Cir. 1999)