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A three-judge panel has tossed out the defamation suit brought by actress Olivia de Havilland, in a ruling that affirms the right of filmmakers to embellish the historical record.

De Havilland sued FX Networks last year, alleging that the miniseries “Feud” included a damaging portrayal of her. The case was closely watched because it appeared to threaten the ability of filmmakers to portray real events with fictionalized elements. But in its ruling Monday, the court unanimously held that such portrayals are protected by the First Amendment.

“Whether a person portrayed in one of these expressive works is a world-renowned film star — ‘a living legend’ — or a person no one knows, she or he does not own history,” Justice Anne Egerton wrote. “Nor does she or he have the legal right to control, dictate, approve, disapprove, or veto the creator’s portrayal of actual people.”

The FX series includes a scene with de Havilland, who is played by Catherine Zeta-Jones, in which she calls her sister, Joan Fontaine, a “bitch.” The character also makes a joke about Frank Sinatra’s drinking. De Havilland, 101, objected, saying the producers of the show never consulted her or got her permission for the portrayal. She also said she would never use a vulgarity in referring to her sister, though she did once call her a “dragon lady” in an interview.

FX sought to have her case tossed out on First Amendment grounds, but in a surprise ruling last fall, Judge Holly Kendig denied the motion. FX appealed, arguing that the ruling would have a chilling effect on docudramas. The Motion Picture Association of America came to the network’s defense, arguing in an amicus brief that the court’s ruling would give politicians and celebrities veto power over films about their lives.

Series creator Ryan Murphy hailed the court’s decision in a statement.

“The reversal is a victory for the creative community, and the First Amendment,” he said. “Today’s victory gives all creators the breathing room necessary to continue to tell important historical stories inspired by true events. Most of all, it’s a great day for artistic expression and a reminder of how precious our freedom remains.”

Charles Rivkin, chairman and CEO of the MPAA, also praised the ruling.

“Today’s decision represents a major legal victory for filmmakers and creators of all kinds, re-affirming their First Amendment right to tell stories about and inspired by real people and events in genres including docudramas, biopics, historical fiction, and documentaries,” he said. “It’s this right that has allowed filmmakers to make movies from ‘Citizen Kane’ to ‘The Devil Wears Prada’ to ‘Primary Colors’ to ‘The Social Network’ to ‘Hidden Figures,’ among countless others.”

De Havilland’s attorney, Suzelle Smith, issued her own statement blasting the ruling, and said she would prepare an appeal.

“Miss de Havilland, her many fans all over the world, and actors in similar situations are rightly disappointed in this Opinion,” she said. “The Opinion does not properly balance the First Amendment with other important rights. … The Court of Appeal, unlike the trial Court, has taken on itself the role of both Judge and jury, denying Miss de Havilland her Constitutional rights to have a jury decide her claims to protect the property rights in her name or to defend her reputation against knowing falsehoods.”

Smith also attacked Egerton, noting that she was a senior VP at NBC in the 1990s, and had previously worked at Munger, Tolles and Olson, the firm that represented FX.

“This is an entirely pro-industry decision, and was clearly written before the hearing less than a week ago,” Smith said.

In its ruling, the court held that the depiction of de Havilland was not malicious.

“Taken in its entirety and in context, Zeta-Jones’s portrayal of de Havilland is overwhelmingly positive,” Egerton wrote. “The work itself belies de Havilland’s contention that Zeta-Jones portrays de Havilland as a ‘vulgar gossip’ and ‘hypocrite.'”

In her suit, de Havilland argued that the production had not paid her for the rights to her story. She cited industry experts who claimed it was standard practice to obtain “life rights” from any prominent people who are still alive, and who said she could have been paid as much as $2.1 million. But the court held that FX was not obliged to pay de Havilland.

“The First Amendment simply does not require such acquisition agreements,” the court held. “The creators of ‘The People v. O.J. Simpson: American Crime Story’ can portray trial judge Lance Ito without acquiring his rights. ‘Fruitvale Station’s’ writer and director Ryan Coogler can portray Bay Area Rapid Transit officer Johannes Mehserle without acquiring his rights. HBO can portray Sarah Palin in ‘Game Change’ without acquiring her rights. There are myriad additional examples.”

Updated with statements from Murphy, the MPAA and de Havilland’s counsel.