I'm having the same error, but it appears that for me, those files are ecrypted. I'm working with Mac OS, and "get info" lists the Security: Password Encrypted. However, I don't need a password to open the file, so I don't know why or how they were encrypted.
I found a workaround, in case you are interested. I open the PDF in Preview, save a copy, then re-upload to paperpile and now can annotate normally. I also tried with Adobe Acrobat Reader DC, but it propagates the security settings (and therefore the annotation error) in the new file.