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Even if the book had the new DRM, kobo devices should be able to read it. They have had the capability to read the new DRM since firmware version 3.5.0 (July 2014).
There could just be something wrong with that book. Kobo devices sometimes report a DRM error if there is something else wrong with the book, even if the book has no DRM at all. But if that is the case there might not be much you can do about it except report the problem to the library or OverDrive.
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