A judge in a jury trial will typically request that counsel for each party submit suggested jury instructions to the judge.  For many common issues, lawyers may draw from and adapt previously used and published jury instructions.  See, e.g. California Civil Jury Instructions 10.69 and 10.88, which you can find from following the appropriate link under Guest Services of Netlaw Libraries, Inc.  Judges will also typically afford counsel the opportunity to argue about which jury instructions the judge should read to the jury and how those instructions should be adapted to a particular case.  From the submissions and arguments of counsel and her own research, the judge will then choose the instructions to be read.  We can reasonably surmise that at trial counsel for Wisconsin Knife Works objected to use of the instruction that Judge Posner is about to quote.