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Privacy has become a critical topic in the engineering of networked systems. Electronic surveillance, both covert and overt, has a negative impact on both the individual and society, and the public's perception of engineered systems that forsake the privacy issue is increasingly negative. Engineers and computer scientists thus have a moral obligation to avoid design choices that are unnecessarily privacy invasive. To fully illustrate this point, we provide an overview of the philosophical, legal, moral, and epistemological literature on the subject of privacy and related implications of its invasion. We then introduce a series of privacy-aware design principles that lead to less invasive information technologies. We develop a smart grid/demand response case study to illustrate the impact of the proposed design rules that protect individual privacy and promote understanding of ethical issues underlying the need for privacy for individuals and society.