How does one respond to this?

[Royal Hijinx]

I can't believe out of all the advice given here no one has said: "Who cares?" What does it matter what she thinks or says? If it's not affecting your work performance it doesn't really matter.

Everyone has people they know that talk smack behind their backs, just let it roll off your shoulder and ignore her. She'll let it go within a week or two once she finds something else that she feels is worth gossiping about.

I kind of agree with this, but it still makes the work place uncomfortable and should be nipped in the bud.