Your only showing the protected pdf or example not the one that isn't protected for anyone to see what is going on. You don't provide screenshot the the affect pdf to verify what is the issue. And if so you need to do a bugzilla for that issue.

Thank you for your response. Here's the screenshot of Firefox allowing the same PDF to be annotated. The other screenshot is taken from Adobe Acrobat which asks for password when I try to edit.

Please let me know if this needs to be asked in the other support. Thank you.

The PDF format only has one password, the password to open, that actually secures the PDF. The permission passwords rely on the honor system.

A decision was made a long time ago not to restrict copying text from a "protected" PDF in the PDF.js viewer used in Firefox. This has carried forward to other permissions, like printing. For this reason, the preference pdfjs.enablePermissions is set to false by default. I doubt many users would go into about:config and switch this to true to limit their ability to copy text from PDFs, print them, etc. However, recognizing that IT admins might want to do that in their environment, it can be toggled using Enterprise Policy: https://mozilla.github.io/policy-templates/#pdfjs

I am not aware of a workaround for PDF authors, but maybe you can find it out there wherever Acrobat users share their secrets.