Bob and Alice each have a bit string they want to keep private. They each want to know what the bitwise AND of their two strings would be without telling the other or anyone else listening to their exchange their actual bit strings... how can they do this? Keep in mind that even once they both hold the AND of their two bit strings, they should still not be able to calculate the other person's string exactly (unless of course one of their strings was all 1s).
I know that I have seen something similar before in some sort of mutual key system/voting system but I couldn't remember where. It has to be something like make a private random key, xor it and use that somehow... but I couldn't work out the details. Any clever encryption design people out there?