Abstract: Apparatus and method for encoding data in an AC coupled bi-polar data transmission system. A stream of binary data is encoded to produce first and second binary code signals for transmission on a pair of transmission lines. Except as provided by the encoding technique, both binary code signals undergo a change of state for each data bit time. The signal on one line undergoes a transition for each bit time except when the data signal is changing from zero to one. The other transmission line undergoes a change of state for each bit time except when the data signal changes from one to zero. Decoding of the transmitted signals is achieved by applying both signals to an exclusive OR gate.