Allen was accused of sexually abusing his adopted daughter Dylan with ex Mia Farrow in the '90s.
Actress Blake Lively says she was offended by the rape joke directed at her Cafe Society director Woody Allen during the opening ceremony of Cannes Film Festival.
Allen said he did not mind the joke by French comedian and master of ceremonies Laurent Lafitte.
"I think any jokes about rape, homophobia or Hitler is not a joke. I think that was a hard thing to swallow in 30 seconds. Film festivals are such a beautiful, respectful festivals of film and artists and to have that, it felt like it wouldn't have happened if it was in the 1940s. I can't imagine Fred Astaire and Bing Crosby going out and doing that. It was more disappointing for the artists in the room that someone was going up there making jokes about something that wasn't funny," Lively told Variety.
Lively, 28, and her Cafe Society costars Kristen Stewart and Jesse Eisenberg were in the audience when Lafitte took the jab at the 80-year-old director.
"You've shot so many of your films here in Europe, and yet in the US you haven't even been convicted of rape," he said drawing a gasp from the audience.
Lively said it was not just the director but the French funnyman made several other offensive jokes. "But it wasn't just Woody. He made three homophobic comments in a row. A Hitler joke. And a rape joke. It was all within 30 seconds... What on Earth was happening? It was really confusing."
Allen, meanwhile, said he was not bothered by the joke. "I am completely in favour of comedians making any jokes they want. I am a non-judgmental or (non)-censorship person on jokes. I'm a comic myself and I feel they should be free to make whatever jokes they want. It would take a lot to offend me," Allen said.
The Midnight in Paris helmer was accused of sexually abusing his adopted daughter Dylan with ex Mia Farrow in the '90s but there were no charges against him. The allegations resurfaced when Dylan detailed the alleged incident in a letter to the New York Times in 2014.
Allen maintains that Farrow coached the child, then 7, during their bitter split.
He was involved with Farrow's adopted daughter Soon-Yi Previn, who was 21 at the time of the scandal. They later married in 1997.
The director's estranged son Ronan had criticised Hollywood for continuing to celebrate Allen and ignoring these allegations in a recent article just before the Cannes premiere of his new movie.
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 "Cannes 2016, Cannes Film Festival, Cafe Society, Woody Allen, Blake Lively, Dylan Farrow, Mia Farrow, Ronan Farrow, Hollywood")
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