Advice Wanted.... in Family Drama

I was a long time OD member and have had a hard time finding my place over here. I miss having a place to write, so here goes.
I am pregnant with my fourth child, a baby girl due in January. This baby was a complete surprise as we thought we were done after our third child. We currently have two boys and one girl.
Before I found out the gender of our baby, we had picked out two names. The baby was either going to be Gabe or Olivia. I chose the name Olivia because of one of my students (I teach first grade). This Olivia struggles both academically and in her home life. She and I have an incredible bond. She is repeating first grade with me, so this is our second year together. On top of my relationship with Olivia, I just really LOVE the name. In my mind, my daugher is already Olivia. I talk about her. I talk to her. My students talk about her. I love her.
So here’s where the problem comes in. My sister in law’s brother and his wife had a baby girl named Olivia who passed away a few days after her birth. Yes, it is completely heartbreaking, but I am not connected to my sister in law’s brother at all. I was friends with them on facebook, but I have never met them face to face. When my sister in law found out we were naming our daughter Olivia she got so.so angry. She told us that if we used the name she would never speak to us again. I found this irrational but we were considering changing our name just to keep the peace. Last night one of my friends (who didn’t know any of the drama) commented on my facebook about how much she loved the name Olivia. My sister in law was furious. She sent me a message telling me that I am officially the most selfish person she has ever met. She also s” This world is so messed up that people like you, who throw up everyday (I have had a longtime struggle with bulimia) get to have healthy babies while other people’s die”. I was (am) beyond hurt by her comments. Since it seems our relationship is not going to be repaired I have a hard time justifying why I would even change the name now. I hate all of this because I don’t want my husband to lose relationships with his family (most of whom support sister in law).
I am looking for honest opinions on whether or not I am in the wrong. If the deceased baby were any member of my immediate family there would be NO question that I would not use the name. I just don’t understand why my sister in law thinks she can tell me I can’t use the name because her brother and sister in law lost a baby with that name when I don’t even really know them. Feel free to tell me I am being insensitive because I am really questioning myself.
This is supposed to be a happy time as we plan for our little girl but it is clouded by so much hurt and negativity.
Thanks for reading and for any and all advice!