In spite of the death of a baby, parents are still required to offer the `aqeeqah on behalf of them. This is backed by many evidences mentioned in the fatwa below. Moreover, it is not necessary that people gather together for the `aqeeqah meal because the infant has died. Parents can simply give some in charity, eat some, and give some as gifts.
Sheikh M. S. Al-Munajjid, a prominent Saudi Muslim lecturer and author, states the following: It is prescribed for parents to offer `aqeeqah for their dead baby, because of the general meaning of the evidence which includes the following:
1. It was narrated by Salman ibn `Aamir (may Allah be pleased with him) that the Prophet (peace and blessings be upon him) said: “Every child should have his `aqeeqah, so shed blood for him, and wipe the dirt away from him.” (Reported by al-Tirmidhi)
2. It was narrated that Samrah ibn Jundub (may Allah be pleased with him) said: The Messenger of Allah (peace and blessings be upon him) said: “Every child is in pledge for his `aqeeqah, so slaughter (the sheep) for him on the seventh day, and give him his name, and shave his head.” (Reported by al-Tirmidhi)
If it is not appropriate to invite people to gather for the `aqeeqah meal because the infant has died, then you can give some in charity, eat some, and give some as gifts.