DP's BIL is like this. Vile man.
I vary my approach. Sometimes I do snooty: give a deep sigh and just say "I won't dignify that nonsense with an answer"; sometimes I point out that he is really very rude and unkind (this one works best when he's bullying someone else, imo); sometimes I ask why he's such a bully, which leads to the response that "It's just banter" followed by me replying "But unwanted banter is bullying" (similarly, "It's just a joke" is met with "No, BIL, jokes are funny, that was just rude and spiteful").
Sometimes I just blank him, which is my favourite. He gets worse and worse, like a naughty child, as he tries to get my attention, until eventually MIL tells him off or his wife starts crying. On one memorable occasion, he finally lost his rag and started ranting and swearing at me. I just looked at DP and said "I won't be spoken to like this. Let's go". Apparently, all hell broke loose after we'd left.
DP is no pussycat, but he's got a mild manner about him and quite slow to anger. Following one of my exchanges with his BIL, he just turned to him and said, quietly, "I don't know why you bother, BIL, you'll never get one over on Lakie. She's far too clever for you". BIL was gobsmacked.