Federal Judge Dale Kimball on Thursday also denied Novell's motion to dismiss the suit and SCO's motion to move the case to state court.
On the damages ruling, SCO issued a statement Friday, saying: "We look forward to responding to the court's order regarding special damages that have resulted from Novell's actions."
Novell also issued a statement, saying it was pleased that the case would stay in federal court, which the software company argued was the proper venue for addressing copyright issues. Novell, based in Waltham, Mass., also said it was "encouraged" by the judge's order for an amended suit from SCO.
In his ruling, Kimball said SCO hadn't give the court "any information as to the scope of customer confusion, its lost business, or made any allegations that there, in fact, has been a realized pecuniary loss as a result of Novell's statements."
SCO had intended to specify damages at trial, a spokesman said.
In its suit, SCO, based in Lindon, Utah, claims Novell slandered the company by publicly stating SCO did not own the copyrights to Unix code that the plaintiff said Novell sold in 1995 to Santa Cruz Operation Inc., which later became SCO.
By challenging SCO's ownership, Novell harmed SCO by causing confusion among its customers and potential customers, the suit alleges. In addition, Novell's statements hampered SCO's efforts to protect its ownership of Unix.
SCO's copyright claims have led to a multibillion-dollar suit against IBM. The federal suit, filed in Utah in March 2003, claims IBM violated its SCO license by inserting the company's copyrighted code in Linux, an open-source operating system that's available for free. In addition, SCO has filed suits against companies using Linux, claiming users of the operating system should pay for their use of the Unix code.