[Ripplinger]

That is definitely a broken substrate of the screen, they are fragile. Possibly something pressed against the reader and put pressure on it, or the reader was "flexed" very slightly, both would result in a cracked screen. The substrate lies under the top layer so that's why you can't seem to feel any crack or damage in the screen. But it's definitely a cracked screen caused by physical damage and not covered under Kobo's warranty.

It's the uneven angled slice in the circled area that can be nothing else other than a cracked screen. If it were just pefectly straight lines, either vertical or horizontal, it could be a bad controller, but that's not the case in your image. In reading their full response, they referred to the specific area as well and said how they could tell it was physical damage.