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The file is coded with an expiration date. Open the library book on your ereader. Then press Options > Info. At the bottom of the information page is "Expiration Date". Above that is a line that should say "Digital Rights: Full, viewable". Now open a non-library book and look at the information page. You won't see this Expiration Date line item. If the non-library book doesn't have DRM, then you also won't see the Digital Rights line item.
The Expiration Date is compared to the reader internal clock. That is how the device knows whether to let you view the file or not. If the reader clock is after the file expiration date, then you will get a protected page error. If the reader clock is before the file expiration date, then you are able to view the book.
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