Activate Games Inc. v. Square Entertainment LLC

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Nina Y. Wang
Civil Action No. 25-cv-00259-NYW-CYC
ACTIVATE GAMES INC.,
Plaintiff/Counterclaim Defendant,
v.
SQUARE ENTERTAINMENT LLC,
Defendant/Counterclaim Plaintiff.
______________________________________________________________________
MEMORANDUM OPINION AND ORDER
______________________________________________________________________
Pending before the Court is Plaintiff Activate Games Inc.’s Motion for Voluntary
Dismissal of its Claims Pursuant to Fed. R. Civ. Proc. 41(a)(2) and Dismissal of Square’s
Declaratory Judgment Counterclaims as Moot (the “Motion” or “Motion for Voluntary
Dismissal”). 	[Doc. 32, filed July 31, 2025]. 	Defendant Square Entertainment, LLC
(“Defendant” or “Square”) filed a Response, indicating that it does not oppose dismissal
of Plaintiff’s affirmative claims with prejudice or dismissal of some of its counterclaims for
declaratory judgment of patent non-infringement and invalidity. [Doc. 34, filed August 14,
2025]. But Square does object to dismissal of other counterclaims for non-infringement
and 	invalidity 	and 	requests 	that 	the 	Court 	retain 	jurisdiction 	to 	adjudicate 	those
counterclaims. 	[Id. at 5]. Plaintiff Activate Games, Inc. (“Plaintiff” or “Activate”) filed a
Reply. [Doc. 37, filed August 28, 2025]. For the reasons set forth in this Order, the Motion
for Voluntary Dismissal is GRANTED.
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BACKGROUND
On January 24, 2025, Activate initiated this action against Square alleging
infringement of U.S. Patent Nos. 11,511,171 (the “’171 Patent”) and 11,986,713 (the “’713
Patent”) (collectively, the “Patents-in-Suit”). [Doc. 1]. Specifically, Activate asserted that
Square had been and was infringing upon certain claims of the Patents-in-Suit by
manufacturing, using, importing, selling, and/or offering for sale in the United States
products, methods, processes, services and/or systems, including but is not limited to the
Pixel™ Game System (“Pixel Game System”), which featured an interactive, light-up
floor. 	[Id. at ¶ 2]. 	Activate asserted two counts: 	(1) infringement of the ’171 Patent
(“Count I”); and (2) infringement of the ’713 Patent (“Count II”). 	[Id. at ¶¶ 34–47]. 	In
support, Activate attached two charts identifying exemplary infringement contentions.
See [Doc. 1-6; Doc. 1-9].
On March 17, 2025, Square filed an Answer and Counterclaims. [Doc. 16]. In its
Counterclaims, Defendant sought declaratory judgments for (1) non-infringement of the
’171 Patent (“Counterclaim I”); (2) invalidity of the ’171 Patent (“Counterclaim II”); (3) non-
infringement of the ’713 Patent (“Counterclaim III”); and invalidity of the ’713 Patent
(“Counterclaim IV”). [Id. at 25–31].
To facilitate pretrial proceedings, the Court a Protective Order, an ESI Protocol,
and Scheduling Order. 	[Doc. 19; Doc. 26; Doc. 28]. 	On March 31, 2025, Activate filed
an Answer to Square’s Counterclaims. 	[Doc. 29]. 	On April 7, 2025, Square filed an
Amended Answer, [Doc. 30-2], and on April 21, 2025, Activate filed another Answer, [Doc.
31]. 	Not long after, Activate filed this instant Motion for Voluntary Dismissal, because
while it “believes its infringement claims remain strong, Square’s Accused Products have
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not been particularly successful in the marketplace.” [Doc. 32 at 3]. Upon motion by the
Parties, the Honorable Cyrus Y. Chung stayed all pretrial proceedings pending the
resolution of this instant Motion. [Doc. 40].
LEGAL STANDARD
Rule 	41(a) 	of 	the 	Federal 	Rules 	of 	Civil 	Procedure 	provides 	for 	voluntary
dismissals. Fed. R. Civ. P. 41(a). The first subpart of the Rule allows for dismissal without
a court order when (1) a plaintiff files a notice of dismissal before the opposing party files
an answer or summary judgment, or (2) when all parties who have appeared sign a
stipulation of dismissal. Fed. R. Civ. P. 41(a)(1). The second subpart of the Rule applies
when Rule 41(a)(1) does not. That subpart provides:
Except as provided in Rule 41(a)(1), an action may be dismissed at the
plaintiff’s request only by court order, on terms that the court considers
proper. If a defendant has pleaded a counterclaim before being served with
the plaintiff’s motion to dismiss, the action may be dismissed over the
defendant’s objection only if the counterclaim can remain pending for
independent adjudication. 	Unless the order states otherwise, a dismissal
under this paragraph (2) is without prejudice.
Fed. R. Civ. P. 41(a)(2).
ANALYSIS
I. 	Voluntary Dismissal
A. 	Counts I and II, Counterclaims III and IV, and Counterclaims I and II,
Insofar as They Pertain to Claims 9–20 of the ’171 Patent
In its Motion for Voluntary Dismissal, Activate seeks to voluntarily dismiss its
affirmative claims of patent infringement of the Patents-in-Suit with prejudice and requests
dismissal of Square’s Counterclaims for lack of subject matter jurisdiction. 	[Doc. 32 at
12]. 	Square does not oppose the dismissal with prejudice of Counts I and II, Activate’s
affirmative claims of patent infringement. [Doc. 34 at 4]. Similarly, Square does not object
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to the dismissal without prejudice of Counterclaims III and IV, which seek a declaratory
judgment of non-infringement and invalidity as to the ’713 Patent. 	[Id. at 5]. 	Nor does
Square object to dismissal of Counterclaims I and II insofar as those Counterclaims seek
a declaratory judgment of non-infringement and invalidity with respect to claims 9–20 of
the ’171 Patent. 	[Id.]. 	Accordingly, this Court respectfully GRANTS the Motion for
Voluntary Dismissal as unopposed as to Counts I and II, Counterclaims III and IV, and
Counterclaims I and II insofar as they pertain to claims 9 –20 of the ’171 Patent.
B. 	Counterclaims I and II, Insofar as They Pertain to Claims 1–8 of the
’171 Patent
Square does, however, object to dismissal of Counterclaims I and II insofar as they
seek a declaratory judgment of non-infringement and invalidity of claims 1–8 of the ’171
Patent. [Id.]. It concedes that Activate did not assert infringement of these claims against
it in this action. See [id. (“However, Square does oppose dismissal of its counterclaims
of non-infringement and invalidity of the remaining non-asserted claims 1–8 of the ‘171
Patent.”) (emphasis added)]. 	But it insists that dismissal of Counterclaims I and II with
respect to claims 1–8 of the ’171 Patent is inappropriate because Plaintiff was unwilling
to agree to a broad covenant not to sue on any of Activate’s intellectual property and
reserved the right to later assert infringement of claims 1–8 of the ’171 Patent. [Id. at 9,
11]. Square points to the following to support its arguments that this Court continues to
maintain subject matter jurisdiction to adjudicate this subset of Counterclaims I and II:
Activate (1) first alleged infringement that included claims 1–8, in December
of 2023; (2) has continuously alleged infringement of its claimed sensing
system over the 20 months since; (2) bases its allegations on bare
conclusions without evidence or analysis; (3) filed this lawsuit when proper
pre-suit diligence would have revealed non-infringement; (4) presented a
pre-discovery settlement offer akin to extortion; (5) continues to baselessly
assert infringement despite being presented with evidence to the contrary;
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(6) intentionally timed its 2024 IAAPA complaint to maximally harm Square;
and (7) refused to covenant not to sue.
[Id. at 13].
In Reply, Activate insists that there is no actual controversy as to the infringement
or validity of claims 1–8 of the ’171 Patent. 	[Doc. 37 at 6]. 	It argues that it has never
asserted that Square or its accused products infringe claims 1–8 of the ’171 Patent or
took any affirmative acts related to the enforcement of claims 1–8; while its initial letter to
Pixel Games GmbH identified the ’171 Patent, Activate did not identify any particular claim
of that Patent and did not expressly reserve its ability assert claims 1–8. [Id. at 7–8]. It
also argues that Square ignores the claims 1–8 are distinct in their limitations to claims
9–20. [Id. at 8]. Activate further points out that Square never requested a covenant not
to sue solely on the Patents-in-Suit but rather on Activate’s entire intellectual property
portfolio 	extending 	to 	“all 	patents, 	trademarks, 	and 	copyrights 	owned 	anywhere
throughout the world.” [Id. at 9–10]. While Activate frames its argument with respect to
Square’s Counterclaims in terms of mootness, see [id. at 10–12], neither Party actually
grapples with the principles of mootness.1 Instead, the relevant inquiry is whether there
1 “Mootness has been described as the doctrine of standing set in a time frame: 	The
requisite personal interest that must exist at the commencement of the litigation (standing)
must continue throughout its existence (mootness).” RMA Ventures Cal. v. SunAmerica
Life Ins. Co., 576 F.3d 1070, 1073 n.6 (10th Cir. 2009) (quotation omitted). Mootness is
judged by the state of facts as they exist after the complaint is filed. WildEarth Guardians
v. Pub. Serv. Co. of Colo., 690 F.3d 1174, 1185 (10th Cir. 2012). 	“Mootness usually
results when a plaintiff has standing at the beginning of a case, but, due to intervening
events, loses one of the elements of standing during litigation.” Id. at 1182. Here, there
have been no changed circumstances involving claims 1–8 of the ’171 Patent. 	Square
admits that Activate “is not litigating claims 1–8 of the ’171 Patent,” but instead is
concerned that “[Activate] is free to litigate infringement with respect to these claims at
any time.” 	[Id. at 4]. 	Accordingly, Rule 41(a)(2)’s provision that an action may only be
“dismissed over the defendant’s objection only if the counterclaim can remain pending for
independent adjudication,” is also inapposite.
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is a sufficient case or controversy under Article III of the Constitution to justify Square’s
Counterclaims of non-infringement and invalidity as to claims 1–8 of the ’171 Patent.
“[A] plaintiff must demonstrate standing separately for each form of relief sought.’”
Smith v. U.S. Immigr. and Customs Enf’t, 429 F. Supp. 3d 742, 755 (D. Colo. 2019)
(quotation omitted). The Declaratory Judgment Act grants courts the authority to “declare
the rights and other legal relations of any interested party seeking such declaration,
whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a); see also Fed. R.
Civ. P. 57 (“These rules govern the procedure for obtaining a declaratory judgment under
28 U.S.C. § 2201.”). 	“The threshold question for declaratory judgment jurisdiction is
‘whether the facts alleged, under all the circumstances, show that there is a substantial
controversy, between parties having adverse legal interests, of sufficient immediacy and
reality to warrant the issuance of a declaratory judgment.’” 	Mitek Sys., Inc. v. United
Servs. Auto. Ass’n, 139 F.4th 1340, 1348 (Fed. Cir. 2025) (quoting Microsoft Corp. v.
DataTern, Inc., 755 F.3d 899, 903 (Fed. Cir. 2014)). 	The burden lies with Square to
establish that, with respect to claims 1–8 of the ’171 Patent, an Article III case or
controversy existed at the time Counterclaims I and II were filed and still continues now.
See Arris Grp., Inc. v. Brit. Telecommunications PLC, 639 F.3d 1368, 1373 (Fed. Cir.
2011).
Here, the Court concludes that Square has failed to carry its burden of establishing
that there is a substantial controversy between the Parties of sufficient immediacy and
reality to warrant the issuance of a declaratory judgment. 	As an initial matter, it is
axiomatic that the infringement and invalidity analyses are conducted on a patent claim-
by-patent claim basis, not on a patent-by-patent basis. 	See Amazon.com, Inc. v.
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Barnesandnoble.com, Inc., 239 F.3d 1343, 1351 (Fed. Cir. 2001) (“Of course, whether
performed at the preliminary injunction stage or at some later stage in the course of a
particular case, infringement and validity analyses must be performed on a claim-by-claim
basis.”). 	There is no evidence in the record that demonstrates that Activate has ever
asserted that Square infringes claims 1–8 of the ’171 Patent, or even accused Square or
Pixel of such. 	See [Doc. 34-1]; see also [Doc. 1-3]. 	Indeed, Square itself has never
specifically identified claims 1–8 as the subject of its requests for declaratory judgments
of non-infringement and invalidity. See [Doc. 30-2; Doc. 34-2; Doc. 34-5]. Square’s fear
of a future infringement action, without more, cannot form the basis of an Article III case
or controversy. 	Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1338 (Fed. Cir.
2008). And insofar as Square relies on Activate’s unwillingness to extend a prospective
covenant not to sue, this Court notes that “[a] patentee has no obligation to spend the
time and money to test a competitors’ product nor to make a definitive determination, at
the time and place of the competitors’ choosing, that it will never bring an infringement
suit.” 	Id. at 1341. 	Finally, Square’s concern that its Counterclaims might be dismissed
with prejudice is misplaced as a matter of law. Where a district court dismisses an action
for lack of jurisdiction, the dismissal must be without prejudice. See Brereton v. Bountiful
City Corp., 434 F.3d 1213, 1216 (10th Cir. 2006).
Accordingly, this Court respectfully GRANTS the Motion for Voluntary Dismissal
as to Counterclaims I and II, insofar as they pertain to claims 1–8 of the ’171 Patent.
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CONCLUSION
For the foregoing reasons, IT IS ORDERED that:
(1) 	Plaintiff Activate Games Inc.’s Motion for Voluntary Dismissal of its Claims
Pursuant 	to 	Fed. 	R. 	Civ. 	Proc. 	41(a)(2) 	and 	Dismissal 	of 	Square’s
Declaratory Judgment Counterclaims as Moot [Doc. 32] is GRANTED;
(2) 	Claims I and II of the Complaint are DISMISSED with prejudice;
(3) 	Counterclaims I–IV of the Amended Answer are DISMISSED without
prejudice for lack of subject matter jurisdiction; and
(4) 	The Clerk of the Court is DIRECTED to TERMINATE this action.
DATED: March 30, 2026 	BY THE COURT:
_________________________
Nina Y. Wang
United States District Judge
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